In Re Bauernschmidt's Estate

McSherry, C. J., delivered the opinion of the Court. George Bauernschmidt had been engaged in the brewery business for some years and had amassed considerable property. His family consisted of himself, his wife and seven children. In eighteen hundred and eighty-nine he determined to conduct his business through and in the name of a corporation and accordingly he procured a certificate of incorporation creating the George Bauernschmidt Brewing Company.

All the stockholders were members of his family. ’ The property and business taken over by the corporation were his individually, the other incorporators having no interest in that property or that business ; and it is not pretended that they gave any value whatever for the shares of stock which were issued to them. Upon the organization of the company certificates of stock were issued representing a total of two hundred shares, the number fixed in the articles of incorporation. Of those two hundred shares he retained one hundred and ninety-six and gave one to each of four of his children. Subsequently there was a new and different division made of the shares and later on, one of the children having died, the distribution of the shares was again rearranged and new certificates were issued..

Under this last arrangement one hundred and forty shares were issued to George Baurenschmidt and Margaretha Baurenschmidt, his wife, as joint tenants ; and ten shares to each of their six surviving children. In eighteen hundred and ninety-eight The Maryland Brewing Company was incorporated to take over and consolidate all the brewery business in Baltimore City. The George Baurenschmidt Company sold certain of its property and its whole business to the syndicate which organized the Maryland Brewing Company, and the price agreed to be paid was one million of dollars in cash and one million of dollars in stock of the new corporation—pre ⁴⁵ ferred and common in equal amounts. Before that sale could be consummated the purchasers required the stockholders of the George Baurenschmidt Company to transfer in blank and to deliver to Sperry, Jones & Company, wjho were promoting the new enterprise, all the certificates of the capital stock of the Bauernschmidt Company ; and this was done on March the first, eighteen hundred and ninety-nine.

Frederick Bauernschmidt, one of the sons who held a certificate for ten shares, was opposed to the scheme of selling to the Maryland Brewing Company. Without going into the details, because it is unnecessary to do so, it is enough to say that after some delay George Baurenschmidt agreed to give Frederick the sum of one hundred and fifty thousand dollars and thereupon Frederick transferred to his father the certificate which the former held for ten shares of the Bauernschmidt Company’s stock. On the first of March, eighteen hundred and ninety-nine the sale to the Maryland Brewery Company was completed and a conveyance was duly executed. George Bauernschmidt then gave to each of his other five children a like sum of one hundred and fifty thousand dollars, though some of them did not receive the money until after his death.

He had for some years rented from several of the Trust and Security Companies of Baltimore safe deposit boxes in which his own and the Bauernschmidt Brewing Company’s investments were kept; but he always retained the keys himself. After the consummation of the deal with the Maryland Brewing Company and on March the thirteenth, eighteen hundred and ninety-nine, one of the boxes, viz., box No. 4392 in the Mercantile Trust and Deposit Company which had stood in the name of the Bauernschmidt Brewing Company, was surrendered and was then re-rented to George and Margaretha Bauernschmidt to be entered severally under the following agreement : “We agree to hire and hold safe No. 4392, or any safe for which it might be exchanged, as joint tenants, the survivor or survivors to have access thereto in case of the death of either.” George Bauernschmidt gave to his wife one of the two keys to the box and retained the other, saying to her “here is your key to the safe-deposit box.” ⁴⁶ On December the thirtieth, eighteen hundred and ninety-eight, whilst negotiations were pending for the sale of the Bauernschmidt brewery to the Maryland Brewery Company, George Bauernschmidt with three of his children and one of his employees organized a corporation called the Baltimore Realty Company whose chief object was to acquire and hold all the property of the Bauernschmidt Brewery Company which was not to be included in the sale to the Maryland Brewery Company. The capital stock was fixed at one hundred thousand dollars, divided into one thousand shares of the par value of one hundred dollars per share.- The stock was issued as follows: Nine hundred and eighty shares to George and Margaretha Bauernschmidt as joint tenants and five shares to each of four of his children—the two who were excluded being those who filed the bill of complaint by which the pending proceedings were begun. On the first of March, eighteen hundred and ninety-nine the Bauernschmidt Brewery Company conveyed considerable property to the Realty Company and assigned to the latter sundry mortgages, which property and mortgages it was agreed should be received in payment ■ for the entire issue of stock of the Realty Company.

None of these conveyances or assignments embraced bonds, stocks or other like securities, except some judgments. On April the fourth-, eight hundred and ninety-nine, George Bauernschmidt, then being quite ill, made his last will and testament and'on the twelfth of the same month he died. By his will he gave to his widow a life estate in all - his property coupled with certain powers which will be stated and considered later on. After the expiration of the life estate he directed “ the rest, residue and remainder of” his “ said estate then being ” to be equally divided amongst his six children—the share of one of them, who was afflicted, being placed in trust. ■ On July the twenty-sixth, eighteen hundred and ninety-nine, or a little more than three months after the death of George Bauernschmidt, Mrs. Bauernschmidt executed a deed of trust to the Baltimore Trust and Guarantee Company conveying upon certain trusts six hundred and fifty thousand dollars of ⁴⁷ securities.

This sum of six hundred and fifty thousand dollars was made up of the following items : Three hundred and twenty-six thousand dollars in bonds which were in box No. 4392 of the Mercantile Trust Company. That box stood, as has been stated already, in the names of George and Margaretha Bauernschmidt as joint tenants. One hundred and seventeen thousand dollars in bonds which the evidence shows had been purchased by Mrs. Bauernschmidt; seven thousand dollars in Baltimore City stock held by the Bauernschmidt Brewery Company, but transferred to Mrs. Bauernschmidt on May the eleventh, eighteen hundred and ninety-nine ; sixty thousand dollars in stocks and bonds transferred by the Realty Company to Mrs. Bauernschmidt on August the twenty-eighth, eighteen hundred and ninety-nine ; ninety thousand dollars in bonds of which eighty-five thousand and five hundred dollars were registered in the name of George Bauernschmidt and are accounted for in the inventory filed by his executrix ; and fifty thousand dollars in City and Suburban Railway bonds which were the sole property of Elizabeth Bauernschmidt— the afflicted daughter. These latter were purchased with part of the one hundred and fifty thousand dollars given to Elizabeth by her father when he paid Frederick the like sum for his ten shares of stock.

On September the seventh, eighteen hundred and ninety-nine, Mrs. Bauernschmidt conveyed to the Baltimore Realty Company certain mortgages which had been executed to George Bauernschmidt; and the conveyance purports to have been made in accordance with and by virtue of the powers conferred upon her by the will of her husband. On September the fifth of the same year Mrs. Bauernschmidt stated her first account as executrix in the Orphans’ Court of Baltimore City. In that account none of the securities conveyed by the deed of trust, except the eighty-five thousand five hundred dollars above mentioned, and none of the mortgages transferred to the Realty Company by the conveyance of September the seventh, are dealt with or mentioned. Two of the sons, Frederick and William, insist that the deed of ⁴⁸ trust if sustained will' dispose of the property sought to be transferred by it upon limitations different from those authorized by the will of their father, and that it is, therefore, an unauthorized and illegal instrument; and they further contend that the assignment of the mortgages to the Realty Company is likewise unwarranted.

They therefore filed a bill in Circuit Court No. 2, of Baltimore City, against Mrs. Bauernschmidt individually and as executrix, against the other four children, the Realty Company and the Baltimore Trust and Guarantee Company, in which bill they prayed that the Court would take jurisdiction over the administration of the estate of George Bauernschmidt and would vacate and set aside the deed of trust and the conveyance of the mortgages, so that the securities mentioned in the deed of trust and in the conveyance may be accounted for as part of the assets of George Bauernschmidt’s estate. To this bill answers were filed by all the defendants and quite a volume of testimony was taken. Without going into a minute recital of the averments of the bill or the statements of the answers it will suffice to say that the questions which are now before us for solution may be reduced to two, viz. : First. Is the deed of trust dated July the twenty-sixth valid ?

Secondly. Is the conveyance of September the seventh transferring the mortgages to the Realty Company effective ? The first question is divisible into two inquiries, viz. : First. Assuming that the securities mentioned in the deed of trust belonged to George Bauernschmidt at the time of his death, does his will empower his executrix to make the disposition of them, which has been made by the deed ?

Secondly. Did those securities belong to the estate of George Bauernschmidt, and did any of them which had been his, become the property of Mrs. Bauernschmidt either by reason of her being named as joint tenant with her husband in the certificate for one hundred and forty shares of the Bauernschmidt Brewery Company’s stock ; or by virtue of a gift of them to her by her husband as evidenced by his declarations and by the method adopted in placing them in the safe deposit box of the Mercantile Trust Company, as hereinbefore stated? ⁴⁹ The Circuit Court declared by paragraph (d) of its decree that the deed of trust was void and that all the property and securities covered thereby and the proceeds thereof be accounted for before the auditor as a part of the estate of the late George Bauernschmidt. By paragraph (<?) it was adjudged that the conveyance of September the seventh assigning the mortgages to the Realty Company was also null, and the decree directed the proceeds to be accounted for as part of the estate of George Bauernschmidt. And by paragraph (/) it was determined that the alleged gifts of the securities which were in the safe deposit boxes were ineffectual, because there was no sufficient delivery of the securities to pass title thereto ; and they were required to be treated as belonging to George Bauernschmidt’s estate.

From that decree two appeals have been taken—one by Margaretha Bauernschmidt, executrix, and others, and one by the Baltimore Trust and Guarantee Company, trustee. We will now proceed to dispose of the questions presented, as concisely as the nature of the inquiries will permit. First: Is the deed of trust valid ? Assuming that the securities or any of them were the property of George Bauernschmidt at the time of his death, do the provisions of his will authorize his executrix to deal with them as she has done by the deed of trust?

We will first see what the provisions of the will are ; then ascertain what they mean ; then, contrast therewith the dispositions made by the deed of trust; and finally we will determine whether those dispositions are in accordance or in conflict with the scheme, the intention and the terms of the will. Without pausing to note the preliminary clauses of the will or the particular devises of certain real estate made to his wife “ for the full term of her natural life,” we quote the following items inasmuch as they are the controlling and important ones. Item. I give, devise and bequeath unto my wife, Margaretha Bauernschmidt, all the rest, residue and remainder of my estate, of which I shall die possessed or be entitled to, of every kind and wherever situated, for the full term of her nat ⁵⁰ ural life, with full power to her hereby granted, to sell, mortgage, lease, transfer and due conveyance make of said property or of any part thereof, in her sole name and to invest and re-invest the said property and the rents, profits and revenues thereof, and otherwise in any manner to change, dispose of, use and deal, with the said property and the rents, profits and revenues thereof, for her sole benefit and at her sole discretion as fully as I could do. * * * Item.

At and upon the death of my said wife, and after the payment of her just debts and funeral expenses out of any part of the estate which shall come into the hands of the trustees hereinafter named, then and on the happening of that event, I give, devise and bequeath all the rest, residue and remainder of my said estate, then being unto John Bauernschmidt and Sarah Bauernschmidt, and the survivors of them in .trust and confidence nevertheless, for the following trust arses and purposes to wit: First. In trust and confidence immediately upon the death ■of my said wife, to take the said property into possession and .after the payment of all necessary and proper expenses con.nected with said property and the administration of the trust hereby created, to divide the whole of said property remaining into six equal parts and to immediately pay over, convey and ■distribute five of said equal parts in the manner following, that is to say: One equal sixth part each, to my children namely, John, Frederick, William and Sarah Bauernschmidt and Emilie Wehr, nee Bauernschmidt, and in the-event of either of my :said children being then dead and issue surviving, then and in such event, his, her or their child or children shall take the ■parent’s share, equally, share and share alike, and in the event of either of my said children being then dead and no issue of his, her or their body or bodies surviving, then, and in such ■event, in trust, to pay over and distribute his, her or their respective one-sixth share or shares, in equal parts, equally, share and share alike, to and among the surviving children of my body, the child or children of any deceased child or children of my body to take the parents share, per stirpes. ⁵¹ “Whereupon the trust hereby created in said property shall cease and be determined.” As to the remaining sixth part a trust is provided for the benefit of the daughter Elizabeth for life with remainder to her children should she have any, and in default of issue living at her death that share is given over to the testator’s “legal heirs and representatives.” It is obvious at a glance that the interest given to the widow in the residuum was limited to “the full term of her natural life,” unless the superadded powers converted what was expressly declared to be a life estate into an absolute estate, or what, in effect, is equivalent, gave her the right to divert the remainder into a totally different channel so as to defeat the subsequent limitations to the children after the termination of the life estate. The view that the power converted the life estate into a fee is repudiated by the appellants who concede that the will does not vest in the widow a fee-simple estate at all; but they contend that it gives to her full power over the entire estate to dispose of it in any manner she may deem proper and that it limits and vests a remainder only in such property as may be left undisposed of by her at the time of her death. Whether this view is sound depends altogether upon whether it was the intention of the testator that his widow should be clothed with power to defeat the provisions made in subsequent clauses of the will, in behalf of his children.

That intention must be gathered from the face of the will and from the circumstances that surrounded the testator at the time he executed it. This is not the case of a gift generally with a power of disposition of the remainder annexed as in Beneschv. Clark & Bramble, Admr., 49 Md. 497 . But it is a distinct gift of a life estate with equally distinct gifts over in remainder to other persons, and the question is: Does the superadded power authorize the life tenant to cut down or extinguish or change altogether the remainders created by the will; or is the power restricted to the management and conservation of the estate so that it may be kept in its integrity for the- remaindermen without holding the life tenant accountable for waste?

It is manifest that a predominant object of ⁵² the testator was to make ample provision for his widow during her life. He had but recently before the date of his will given to each of his six children one hundred and fifty thousand dollars, and he was apparently solicitous that his widow should enjoy during the remainder of her days the entire income of the estate which he possessed. But this was not all. He was none the less concerned' with respect to the claims of his children and therefore he made an equal division of the residuum between them after the termination of the life estate.

The bulk of his wealth seems to have been invested in stocks and bonds whose values constantly fluctuate in the market, and it was eminently wise to make some adequate and liberal provision by which the life tenant would be clothed with ample power to change those and other investments and property as fully as the testator himself might have done, wheneverand as often as the occasion should require it. Nor does the phrase that the life tenant might “dispose of, use and deal with the said property and the rents, profits and revenue's thereof, for her sole benefit and at her sole discretion as fully as” the testator could have done, indicate an intention to confer upon her a power to disregard and cancel the later clauses of the will. If the scope of the power is as bi'oad as t-he contention of the appellants would make it, then the life tenant could strike down the whole scheme and structure of the will and by gift or deed of trust ti-ansfer the entire property to total strangers. She could cut off every child, or such of' them as she saw fit or as caprice or prejudice might px'ompt, notwithstanding the careful provision in the will for an equal division amongst all of them.

It cannot be supposed and certainly it cannot be read on the face of the will, that the testator meant to give the life tenant such an unresti'icted and complete dominion over his property ; and yet to that length the contention must go if it be valid to the extent to which it has been carried by the deed of trust. By the will after the death of the widow five of the children will take their interests in the remainder absolutely; the share of the sixth being placed in trust. By the deed the same five will take ⁵³ merely an equitable life estate with remainders over in trust to their respective children until the youngest of those children attains the age of twenty-one years, at which time, but not before, the trust is to terminate and the property is to be distributed. Thus the vesting of the remainders is postponed for more than a generation and are then made to vest in totally different individuals from those named in the will.

If such a change may be made in the dispositions contained in the will, then why may not a more radical one of the kind above suggested be also carried into effect ? Not only is the interpretation insisted on by the appellants at variance with the whole scheme of the will, but it is in conflict with adjudged cases as will be seen in a moment. In order to maintain in its integrity the entire will, to keep its chief and most important provisions in harmony and to give effect to the testator's obvious intention to preserve an exact equality amongst his children in the distribution of his large estate, the superadded power must be construed to be co-extensive with the life estate and to be no wider; and, therefore, it must be held that it conferred upon the life tenant authority to dispose of the life estate given to her, and this, and this only, she was authorized to do as fully as the testator could have done. In the recent case of Russell v. Werntz, 88 Md. 210 , the clause in a will then under examination was in these words : “I bequeath unto my present wife, Virginia Russell, all the residue of my estate, including all my property, both real, personal or mixed, to have and to hold and dispose off (sic) as she may see fit, while she remains single, and at her death or marriage, the remaining property is to be equally divided between my two daughters, Grace A. Russell and Jessie V. Russell.” It was contended that the power of disposition being without limitation the widow took a fee, or else, if she took but a life estate, the full exercise of the power would be effectual to convey a fee-simple title in the remainder.

But this contention did not prevail. In the course of the judgment it was said: “It also seems clear to us that he the [testator] desired his children to take the estate after the interest of ⁵⁴ the widow had terminated by marriage or death. * *- * Can it be entertained for an instant that he intended to modify the whole plan, by conferring upon his widow a power of disposition of the reversion whereby-she could defeat the rights of her daughters, appropriate the estate to her own • use,-bequeath or devise it at will, and defy the wish of her- husband that she should retain the estate only-so long as she remained, unmarried ? The possession of- such a power would be inconsistent with and would defeat every intent expressed in or to be gathered from the-will.- *- * *■ * All the clauses and every word in a will should receive such a construction as that, while effect is given to each, they are all made to harmonize with each other, so as to reach the general plan or scope of the entire will. If, however, the clause in question be construed so as to confer on the widow only the right to dispose of the estate-to the extent of the interest she takes in the estate, -it will harmonize with all- the provisions of the will and all the intents to be gathered-therefrom.” Stress was laid by the appellant-in that case upon the use of the words- “the remaining property,” as stress-is laid hereupon the-use of the words “property remaining,” a-s indicating the testator’s intention that the life tenant should have the right to diminish the corpus of the estate and as denoting his purpose, when creating the remainders, to dispose of onlythat which: might be left after-such diminution, But- it was-said in the case just cited : “The property that passed under the second item [the item we have, quoted from Russell’s ■ will] comprehended both realty and personalty.

All of it was liable to waste or decay ; some portions of it doubtless would deteriorate by its use, and other articles were .of such nature that their use was their consumption. In view of the general and particular intents of the will, it is not straining the construction- of these words to regard them as indicating the intention of the testator, that his widow should not be accountable for such- loss or waste as might result from her personal -enjoyment of the property.” The principle applied in deciding the case of Russell v. Werntz is thus clearly stated, p. 215 : “The principle we now apply ⁵⁵ is, that where a testator has given in express terms an estate for life with a power of disposition annexed, with remainder over, the words conferring the power, though absolute, maybe qualified by restraining words connected with and explaining them, so as to confer only such absolute disposal as a tenant for life may make. In such case a power to dispose of the reversion and thereby deprive the remainderman of his interest, would be wholly inconsistent with the intent to grant an estate not to endure beyond life, and it should be so held, unless there is a clear purpose manifested in the will, that the power shall extend to the