Jenkins v. State ex rel. Staylor

Briscoe, J., delivered the opinion of the Court. This is an action brought in the name of the State for the use of the equitable plaintiffs against the principal and surviving obligors on a bond, conditioned for the faithful performance of the duties imposed on the principal as administratrix. The facts as presented by the record are these: William Staylor died intestate in the year 1877, leaving a widow, Jane Staylor: a son, William A. Staylor; and a daughter, Miriam Staylor. Letters of administration were granted upon his estate to the widow, by the Orphans’ Court of Baltimore City, and the Messrs.

Jenkins, the appellants, with a Mr. Whiteford, who has since departed this life, were sureties on her bond. The personal assets of the estate amounted to about 841,000.00, the principal part of which consisted of an interest in the firm of Jenkins, Staylor & ²⁵⁸ Co., of which he was a member, together with the appellants in this case. On or about the 12th clay of June, 1877, William A. Staylor, the son, executed a deed to his mother, Jane Staylor, in which he assigned and conveyed to her “all the right, title, interest, and estate, of the said William A. Staylor, in the estate, real, personal, and mixed, of his deceased father, and in any property of which his father died seized or possessed. ” This deed was propeidy executed, the consideration being $500, and was signed by his wile, Caroline L. Staylor. Jane Staylor, the administratrix, passed on the 26th of June, 1880, an administration account in which she charged herself with the whole personal estate, and after an allowance for debts and expenses, distributed the residue, which amounted to about $27,000.00, as follows: Two-thirds to herself in her own right, and as assignee of William A. Staylor under the deed, and one-third to the daughter, Miriam.

William A. Staylor, the grantor in the deed, departed this life, intestate, on the 16th of June, 1878, one year after the execution of the deed, leaving surviving him a widow and two infant children; and shortly after his death,' on the 10th day of January, 1879, proceedings were begun in the Circuit Court of Baltimore City against Jane Staylor, in behalf of his widow and infant children, to vacate and annul this deed, upon the ground of fraud and undue influence. And the Circuit Court on the 16th day of September, 1880, decreed that said deed he vacated and set aside, and ordered that the case he referred to the auditor to state an account between the said William A. Staylor and Jane Staylor, in her individual right and as administratrix; she in her character as administratrix, and the said Caroline L. Staylor and John J. Dobler, administrators of William A. Staylor, having been made parties to the hill. Testimony was then taken, and the case heard upon exceptions to the auditor’s account. After notice to the ²⁵⁹ parties, and a full hearing, the Court, on the 28th of November, 1884, overruled the exceptions, and by a decretal order ratified and confirmed the account, and ordered that the administratrix of William Staylor pay to the administrators of William A. Staylor, the amount found to be due by her, to wit, the sum of $3,699.37, with interest from November 17th, 1880.

There was no appeal from the decree vacating the deed, nor from the decretal order of the 28th of November, 1884; and upon a failure of the administratrix to pay over the money in accordance with the order, suit was instituted by order of the Court, upon the bond. The principal questions in the case arise partly on demurrer and partly on bills of exceptions to the admissibility of testimony. Some of the questions were disposed of by this Court, on a former appeal, reported in 70 Md., 472 . To the declaration which assigned the non-payment of the money in accordance with the decretal order of the Court as a breach of the condition of the bond the defendants pleaded general performance, and a special plea setting forth the fact of the deed of June 12, 1877, and the distribution in the Orphans’ Court thereunder.

The plaintiffs demurred, to the first plea, and by way of replication to the others alleged, 1. That the deed was vacated and set aside by the decree of the Circuit Court for causes existing at the time of its execution, and that the accounting and distribution was annulled by the Circuit Court. And 2, that the defendant had notice of the pendency of the proceedings in the Court where the deed was set aside. The defendants demurred to the replication, and it being overruled, the sureties then filed rejoinders to the replication.

Other pleadings were then filed on the part of the plaintiffs and defendants, but they relate principally to the effect of the deed of the 12th of June, 1877; to the decree of the Court vacating said deed and to the decretal order of November, 1884. The ²⁶⁰ main question, then, presented for our consideration is,, how far, under the pleadings and evidence of this case, are the sureties upon this bond concluded by the decretal order against their principal for a breach of the duty secured by the bond. It is well settled in this State by numerous authorities that the recovery of a judgment or decree, against the principal in a bond, although the sureties were no parties to the suit, is prima facie binding upon the sureties. They can only relieve themselves of such binding effect of the recovery against the principal, by showing that the amount recovered was in excess of the amount which the plaintiff in the judgment or decree was entitled to recover, or that he was not entitled to recover at all.

Iglehart vs. State, use of Mackubin, 2. G. & J., 235; Parr and Cockey vs. State, use of Cockey, 71 Md., 234 . It is not, however, contended on the part, of the appellants that there was fraud and collusion in the obtention of the decretal order of the Circuit Court, nor that there is error in the ascertainment of the amount directed to be paid by said order, but they seek to en-quire into the validity and effect of the deed of the 12th of June, and the decree vacating said deed, and in this way to bring collaterally in question the decree annulling the deed. If this contention be correct, and they can succeed therein then the decretal order, ascertaining the amount to be due, would be a nullity, and these sureties would not be liable.

But to this contention we cannot assent. The deed of the 12th of June had been decreed by a Court of competent jurisdiction to be null and void, as between the parties thereto, for causes existing at its date, and was no longer to be regarded as a subsisting instrument for any purpose. Having been vacated for fraud and undue influence, it stood as if it had never been made. In the case of Parr and Cockey vs. State, use of Cockey, 71 Md., 233 , and other cases there referred to, this Court held, where a release to a guardian had ²⁶¹ been annulled and vacated for fraud and mistake existing at its date, and it was sought afterwards to be used as evidence in defence to an action on the bond against the sureties, “that it could no longer be regarded as a subsisting instrument to be used for any purpose.

It could not be used as an effective instrument by the guardian himself, nor could it be used by any one standing in a relation of privity with or surety for him.” We are, therefore, clearly of opinion, that it was not competent for the appellants in this case to inquire into the validity of the decree of September, 1880. But the appellants seek to escape liability upon the ground that the money due by them, as surviving partners of the firm of Jenkins, Staylor & Co., to the administratrix of William Staylor, was paid over, and the distribution in the Orphans’ Court was made in accordance with the existing condition of the title, and at a time when the deed was in full force and operation. And this distribution thus made was a lawful and proper one, to the extent of releasing these sureties. But even conceding this contention to be true, we do not think it can relieve them from liability.

The indebtedness from the surviving partners of Jenkins, Staylor & Co. to the estate, was one which had to be paid by them to the administratrix, notwithstanding the deed, and being a debt due to his estate, she was, as said administratrix, in the performance of this duty, bound to make a proper and lawful distribution thereof. And under the obligation which these appellants had voluntarily assumed, they became liable, if she did not so do. When, therefore, the deed under which this distribution was made, was stricken down for fraud and undue influence, causes existing at its date, the distribution which she had made in the Orphans’ Court became likewise a fraudulent one, and null and void. It was then the duty of the Orphans’ Court, upon application, to direct a proper and rightful ²⁶² administration of the estate.

Upon her failure then to-comply with this order, her sureties became liable. This conclusion may work a great hardship to the sureties upon this bond, under the circumstances of this case;, hut it would he an equal injustice to deprive the infant, children of William A. Staylor of a lawful distribution of their father’s estate. We know of no legal principle that would sustain a fraudulent assignee in a fraudulent-distribution of an estate. This theory of the ease, we think, fully disposes of all the questions raised by the-demurrers, and sustains the prayers offered on the part of the plaintiffs below.

There were five hills of exceptions taken by the defendants at the trial, four to the admissibility of evidence and one to the granting of the plaintiffs’ prayers and to the rejection of the defendants’' prayers. The first was taken to the admissibility in evidence of the record and the opinion of the Judge, in the equity case. The effect of the proceedings in that case, we have held, was conclusive on the sureties, and we can see no objection to their being offered in evidence.. The second exception was to the admissibility in evidence of a letter tending to prove notice to one of the sureties of the pendency of the equity suit, and to the exclusion of certain testimony in relation to the competency of the grantor to make the deed and other transactions relative thereto.

From our view of the case, the-evidence offered to sustain the deed was not admissible;, the letter was entirely immaterial and its rejection as. evidence did not injure the defendants’ case. We have held that the effect of the decree was to vacate and annul the deed, and that the distribution thereunder was void, so there was no error in the ruling as to the third and fourth exceptions. The fifth exception was taken to the granting of the plaintiffs’ and the rejection of the defendants’ prayers. The prayers offered on the part of the defendants were manifestly incorrect, as applicable to- ²⁶³ this case, for the reasons we have heretofore given.

Entertaining these views, the judgment will he affirmed. (Decided 8th June, 1892.) Judgment affirmed. The counsel for the appellants filed a motion on the 8th of February, 1892, for a re-hearing of the foregoing case, and the motion was allowed. The case was re-argued at April Term, 1892, and the judgment of the lower Court was affirmed for the reasons given in the foregoing opinion, on the first hearing.

McSherry, J., filed the following dissenting opinion, in which Judges Irving and Bryan concurred: I am unable to concur in an affirmance of the judgment appealed from in this case. As it appears to me, there is a very broad distinction between the deed of June 12th, 1877, which, it is alleged, was stricken down by the decree of the Circuit Court of Baltimore City on September 16th, 1880, and the acts done under the deed, and in reliance upon it, while it was regarded and treated by the parties to it as perfectly valid and free from any taint of fraud. Accepting as true the averments of the bill filed to have it set aside, the deed was not an absolutely void deed ; and whilst it stood unimpeached and unchallenged the appellants, who it is not pretended had the slightest notice of its imperfections (if there were any) were fully justified in making the settlement they offered to show that they did make on the faith of it. It is undeniably true that where a conveyance is procured by a parent from a child, conferring a benefit on the one and causing a detriment to the other, the instrument will be treated as prima facie void when assailed by the grantor, and will be set aside upon his ap ²⁶⁴ plication, unless it appear that it was the free, voluntary and unbiased act of the party who made it.

But that doctrine was not invoked by the bill of complaint which inaugurated the proceedings that resulted in the decree purporting to annul the deed. Nor could it have been relied on in that case in the face of the allegations of that bill. In view of those allegations, Mrs. Jane Staylor was not intended to take a beneficial interest of any sort under the deed, and despite the apparently absolute character of the conveyance, she was merely a trustee holding the title to the fund for the use of her son and his family. Had the hill been differently framed I admit that the deed would have been not only prima facie invalid, but that it would have been rightly stricken down upon the complaint of proper parties, and upon proof of the confidential relation of the grantor and grantee, unless sufficient evidence had been offered to relieve it from all taint or suspicion of fraud or unfairness.

But the theory of the hill, as will presently appear, does not permit the application of this salutary doctrine of a Court of equity. The case, as made by that hill, must be dealt with as the parties have seen fit to present it. Assuming that the deed was properly vacated, it seems to me, the appellants should have been permitted to show, as tending to exonerate themselves from liability on Mrs. Jane Staylor’s administration bond, that the deed was vacated for causes which arose long after its date, and that the distribution made to Mrs. Staylor as assignee of her son was made at a time when the deed was recognized as valid by every person interested in the estate of William Staylor. Whether the deed was void for causes which existed at its date, or on account of reasons arising thereafter, was an issue distinct^ raised on the rejoinder to the replications filed to the defendants’ fourth amended plea.

If Mrs. Jane Staylor, after ²⁶⁵ the assignment and distribution thereunder to her, betrayed any trust reposed in her by her son, she alone, and not the sureties, who only guaranteed her fidelity as administratrix, ought to answer therefor. The appellants offered to show that during the life of William A. Staylor no question was ever raised as to the validity of the assignment by him to his mother, though he lived for a year after the date of the deed. In fact, by a subsequent deed, to which Caroline L. Staylor, the wife of William A. Staylor was a party, he re-affirmed the assignment to his mother. It further appears that, six months after his decease, his widow, in her own behalf, and as next friend of her infant children, filed a bill against Jane Staylor individually, praying that the deed of June 12th, 1877, might be declared null and void.

But upon what ground? Was it for causes which existed at its date, or for causes which arose after the death of William A. Staylor ? The bill furnishes an unequivocal answer to those questions, and demonstrably shows that if Mrs. Jane Staylor had, after the death of her son, treated the residue of the son’s share as held by her in trust for the son’s children,