Horwitz v. Safe Deposit & Trust Co.

Urner, J., delivered the opinion of the Court. The will of Orville Horwitz, who died in 1887, bequeathed to his brother, Theophilus Horwitz, the sum of $20,000 “to be invested safely in permanent securities ⁴³⁹ and the interest, rent and income thereof to be received and enjoyed by him during the term of his natural life,” and the investments to become a part of the testator’s residuary estate after his brother’s death. The fund was invested by the life beneficiary in nine ground rents in Baltimore City, the title to which was conveyed to him with express reference to the limitations of the will. The life estate ended upon the death of Theophilus Horwitz in 1895, but his daughter, Caroline Norris Horwitz, was enabled thereafter to receive the income from those investments as the result of a voluntary and gratuitous provision to that end by the testator’s widow, who had been devised and bequeathed interests in his entire estate, and by his four daughters, who were his residuary legatees and devisees.

That purpose was accomplished by a written authorization to Alexander Yearley & Son, real estate agents, to collect and pay to Caroline Norris Horwitz, “until otherwise instructed,” the net income from the ground rents in which the fund bequeathed by her father for life had been invested. The interests of the residuary legatees and devisees were defined, by the tenth paragraph of the will, as follows: “I give, devise1 and bequeath all the rest, residue and remainder of my Estate and Property of every sort and description, unto my four daughters, Florence, Louisa, Alice and Haller, to be equally divided between them, share and share alike, each of said shares to be held by the daughter to whom the same may be allotted for and during the term of her natural life, free and clear of any control over the same or of any interest therein of any future husband to whom she may be married and without any power or authority to her to dispose of or incumber the same in any way, but with full power to her to manage the said property, to collect in and receive all the rents, issues and profits thereof, and to receipt for the same; and with full power to her to dispose by last Will and Testament, or by any instrument in the nature of a last Will and Testament, of her said share, as fully as if she were a. feme sole; and from and after the death of any one of my said daughters, if ⁴⁴⁰ she should die without executing the power herein granted to make a last Will and Testament, then, as to her said share, to be divided equally amongst the issue of her body lawfully begotten and living at the time of her death, (descendants of deceased children to take per stirpes and not per capita), but in the event of her dying without leaving issue living at the time of her death, then the said share shall be and become a part of my residuary estate and shall pass accordingly.” The widow 'of the testator died in August, 1914, his daughter Florence in September, 1918, and his daughter Louisa in January, 1919. After the death of Louisa a proceeding was instituted in the Circuit Court of Baltimore City for the partition of the large number of ground rents belonging to the residuary estate of Orville Horwitz, including those purchased with the furid which had been bequeathed to his brother for life. To effect an equal division among those entitled it was necessary to sell certain properties which were not susceptible of partition.

The adult parties to the proceeding filed “Requests” that there should be invested so much of the proceeds of such sales “as may be necessary to purchase $24,000. par value of United States 4(4% Bonds for the purpose of providing, after deducting the trustee’s commissions of 5% on the gross income, the sum of $969.00 per annum, to be paid to Caroline Norris Horwitz during her life, in quarterly payments on the first of January, April, July and October of each year and with a proportionate part from the last payment made to her down to the time of her death, the said sum of $969. per annum being the amount of annuity heretofore paid to her by the daughters of Mr. Orville Horwitz, deceased.” Those requests were signed by the testator’s daughter Alice, the wife of Count Pietro Andreozzi-Bernini, by his daughter Haller, the wife of Col. Ronald Brooke, and by the residuary legatees and devisees under the will of the testator’s two deceased daughters, Florence, who at the time of her death was the wife of Count Renato Segalla di San Gallo, and Louisa, the widow of William C. Bullitt, each of the de ⁴⁴¹ ceased daughters having by their wills exercised the powers of appointment given them by their father’s will as to the shares of his residuary estate in which they respectively had life interests. The will of Countess di San Gallo devised and bequeathed two-thirds of the portion of her father’s estate over which she had a power of testamentary disposition to her three sisters, Louisa, Alice and Haller, the share of Louisa to be held for her in trust by the Safe Deposit & Trust Company of Baltimore, Maryland, and at her death to pass to her two sons or their heirs per stirpes absolutely. The remaining .one-third of the appointed estate was devised and bequeathed to Maria Beatrice Andreozzi-Bemini, niece of the testatrix.

There was also the following provision in the will of Countess di San Gallo: “I direct that my Executor pay over to my cousin, Caroline Norris Horwitz during her life time, through Messrs Alexander Yearley & Son, Real Estate Agents of said Baltimore, or in whatever may prove more convenient, the same annual sum of money which she has been receiving since the decease of her late Father out of my portion of the estate of my late Father. At her death said sum becomes a part of my residuary estate and passed accordingly.” By the will of Mrs. Bullitt all of her residuary estate and that over which she had a power of appointment under her father’s will was devised and bequeathed to her sons, William C. Bullitt, Jr., and Orville H. Bullitt, and to Thomas Raeburn White, in trust for the benefit for life of such of her three sons as may be living at the time of her death, and for the widow then living of any son of the testatrix who may have predeceased her, with remainder to such persons as her sons respectively may appoint by last will and testament, or in default of such appointment to pass under the laws of Pennsylvania as if her sons had owned the estate absolutely and died intestate. In a preceding clause of her will Mrs. Bullitt had devised and bequeathed her interest in the ground rents in which the legacy for life to Theophilus Horwitz had been invested to Alexander Yearley & Son “in trust, to ⁴⁴² collect and receive the rents, issues and profits thereof, and after deducting all proper charges and expenses to pay over the net income therefrom to” her cousin Caroline Norris Horwitz during her lifetime; and it was provided that after her death the interest of the testatrix in those ground rents should become a part of her residuary estate and as such should be held or distributed. A petition filed by Caroline Norris Horwitz in the partition suit alleged that for many years her cousins Alice, Haller, Florence, and Louisa, daughters of her deceased uncle, Orville Horwitz, had been paying or directing the payment to her out of the undivided estate which they held for life with power of appointment, under their father’s will, the sum of $969 per annum; that when her cousins Louisa H. Bullitt and Florence Horwitz di San Gallo died, each by her will directed the continuance of such payments 'as to their proportions.

That the petitioner, as she was advised, had no legal interest in any of the properties mentioned in the partition proceedings, but, if she had any such interest, she waived it unconditionally; but that it was the express wish and intention of the parties to the suit, all of whom were her relatives, that she should continue during her life to receive as theretofore an annuity of $969 out of the estate, payable in proportion to their respective interests therein, and to that end had proposed and agreed that, in lieu of all other provision previously made for her, whether voluntarily or under any will or otherwise, there should, out of the proceeds of such properties as might be sold rather than divided, foe paid over to the Safe Deposit & Trust Company of Baltimore, a sum sufficient to purchase $24,000 par value 4⁴ per cent. U. S. government bonds, such sums to be contributed by the parties proportionately out of their respective interests, and out of the net income from the investment of such fund the trust company should pay an annuity of $969 to the petitioner in quarterly installments, and pay any surplus income to the contributing parties according to their respective interests, the principal sum invested to be paid to them after the petition ⁴⁴³ er’s death in the proportions stated in the petition, as follows: To Alice Andreozzi-Bernini for life with remainder as set forth in Article 10 of the will of Orville Horwitz. 9/36 To Haller G. Brooke for life with remainder as set forth in Article 10 of the will Trustees of Orville Horwitz. To William C. Bullitt, Jr. Orville H. Bullitt and Thomas R. White under the will of Louisa H. Bullitt, deceased To William C. Bullitt, Jr. To Orville II. Bullitt To Maria Beatrice Andreozzi-Bernini To Alice Andreozzi-Bernini To Haller G. Brooke 9/36 9/36 1/36 1/36 3/36 2/36 2/36 It was further stated in the petition of Miss Horwitz that, if for any reason there should be a deficiency of income, so that the net amount payable to her would be less than $969 per annum, it was the desire of all the parties that any such deficiency “should be made up and compensated out of such part of the principal sum so invested as may belong absolutely to the parties interested therein and shall not be the shares held by such parties merely for life by power of appointment.” Upon that petition the Circuit Court passed an order directing the auditor, in stating an ac'count of the proceeds of any sales in the proceedings, to provide for the payment to the Safe Deposit & Trust Company of Baltimore, as trustee, of a sum sufficient to purchase $24,000 par value of 4% per cent.

U. S. government bonds, such amount to be appropriated from the shares of the parties in the proportions of their respective interests and to be administered by the trustee as the petition proposed. The final decree confirmed that order, but provided further ⁴⁴⁴ “that after the death of the said Alice Andreozzi-Bernini, or the said Haller G. Brooke, respectively, the Safe Deposit and Trust Company, Trustee aforesaid, shall not pay over any part of the corpus of said investment, representing the pro rata share of the one so dying or any part of the income from such share except upon the further order of this Court. * * *” and “that in the event of the death of either of said life tenants before the death of the said Caroline Norris Horwitz, the interest or share in the principal of the said $24,000 of U. S. Government Bonds, belonging, in accordance with the terms of said order, to the one so dying absolutely, shall be chargeable until the death of the said Caroline Norris Horwitz for the payment of that proportion of the income which was previously payable out of the' share held for life by the one so dying, unless this Court shall, upon such death, order and adjudge that said share so held for life shall itself continue chargeable with the payment of such income.” In pursuance of that decree the Safe Deposit & Trust Company of Baltimore received the specified amount of 4% per cent, government bonds and thereafter paid to Miss Horwitz for sixteen years the sum of $969 per annum, in quarterly installments, out of the income from that source. On August 7th, 1935, the trust company filed a petition in which it stated that Mrs. Brooke, who was a resident of England, died on February 2nd, 1932, but it had not until recently learned of her decease. The petition referred to the will of Mrs. Brooke, which exercised her power of appointment under the will of her father, Orville Horwitz, and provided that the estate, after the death of her husband, who predeceased her, should vest in Moyra Henning, her daughter.

It was stated in the petition that the trust company had been advised by Mrs. Henning’s representatives of her unwillingness to permit her interest in the estate to be held for the further purposes of the trust of which Miss Horwitz is the life beneficiary. Mrs. Henning is interested in one-fourth or nine-thirty-sixths of the fund as her mother’s appointee, and ⁴⁴⁵ in two thirty-sixths as her legatee, the latter proportion representing the share acquired by her mother as an appointee of Countess di San Gallo. The principal purpose of the trustee’s petition was to obtain instructions from the court in view of the fact that the persons interested in the trust fund “have and assert conflicting theories as to their respective rights and obligations.” The answer of Countess Andreozzi-Bernini and her daughter, Maria Beatrice (then Maria Benzoni), neither admitted nor denied the allegations of the petition, but submitted to such order or decree as the court might deem proper. In the answer of Mrs. Henning it was alleged that “by a true construction of the agreement set forth in the petition filed in these proceedings on November 8th, 1919, and by the decree passed herein as a result thereof, and by the terms of the will of her grandfather, 'Orville Horwitz,” the respondent “is now entitled to nine thirty-sixths (9/36) of the entire fund mentioned herein as an appointee of her Mother, Haller Gross Brooke, and is also entitled to all of the income thereon from February 2, 1982, the date of the death of her Mother, * * *” but is not “concerned with the use or disposition to be made of the two thirty-sixths (2/36) interest formerly held absolutely by her Mother * * * except insofar as there may be a surplus thereof after the fulfillment of the agreement set forth in said, petition. * * *” Miss Horwitz, the life beneficiary of the trust, asserted in her answer that she is entitled to have the whole of the trust fund retained by the trustee during the remainder of her life, and that, if the income should be insufficient to pay her an annuity of $969, the deficiency should be supplied from the corpus.

The trustees under the will of Mrs. Bullitt denied in their answer that Miss Horwitz is entitled to have any deficiency of income from the trust fund supplied from that part of the principal in which the respondents have an interest in remainder, or from those parts of the principal in which William C. Bullitt, Jr., and Orville H. Bui ⁴⁴⁶ litt, who joined in the same answer, were interested as remaindermen. The last-named respondents, however, stated in the answer that they did not wish to stand upon any telchnical rights which they may be entitled to assert as against the claim of Miss Horwitz with respect to that part of the trust fund in which they have absolute interests in remainder, and that they assented to the use of the principal of each of the one thirty-sixth interests in the fund, to which they are respectively entitled, subject to her life estate, to make up any deficiency which may occur in the income from the fund to such extent as may be necessary to pay her $969 per year, provided that any charges against principal to make up any such deficienlcy shall be pro rated among all remainder interests in the corpus which may be voluntarily, or by decision of court, subject to such a charge. The executors of the will of Mrs. Brooke filed an answer submitting the case to the court’s decision so far as their interests might be involved. After a hearing the court passed a decree to the effect: (A) That the nine thirty-sixths share contributed to the trust fund by Mrs. Brooke out of the estate of her father, in which she had an interest for life with a power of appointment, became upon her death, and by virtue of her exercise of that power, the absolute property of her daughter, Mrs. Henning, who is entitled to receive that' share from the trustee with interest from the date of her mother’s death, less