Johnson v. Swann

Henderson, J., delivered the opinion of the Court. By bill for declaratory decree, the appellee, H. Austin Swann, prayed the equity court in Charles County to determine that he could sell his one-fourth remainder interest in certain stock, under Item 4 of his father’s will, free and clear of the claims of his own children. His two brothers and his sister were not made parties to the proceeding. His mother, the life tenant and trustee, joined in the bill and agreed to the sale provided it “is consummated without prejudice to” her right to the income and voting privileges during her life.

His married daughter opposed the proposed sale, claiming that his interest was contingent upon his surviving the life tenant. His four other children, being infants, answered by guardian ad litem. The Chancellor, in an able and succinct opinion, found the complainant entitled to the relief prayed. This appeal fol ²¹⁰ lowed.

No questions are raised as to the right to declaratory relief or necessary parties. Harold S. Swann died in October of 1948, leaving a will dated November 12, 1946, which was duly probated. After some minor bequests, Item 4 provided as follows: “I give and bequeath all of the stock of the Southern Maryland Oil Co., Inc., registered in my individual name at the time of my death, to my devoted wife, Elizabeth P. Swann, if she survives me, in trust to receive the full income therefrom for her sole benefit during the period of her natural life, my said Trustee to have full authority and power to vote said stock and to act in every respect she deems for the best interest of the corporate business; and upon the death of my wife said trust shall cease, or if she should predecease me, I hereby give and bequeath the aforesaid stock (or the proceeds from the sale of the same if purchased by James W. Wills pursuant to his option in this respect) to my four children, namely, Anna Swann Wills, Harold Austin Swann, T. Allen Swann and William Hayes Swann, share and share alike, per stirpes and not per capita; and in the event James W. Wills does not elect to exercise his option to purchase said stock within the time prescribed by said agreement, it is my will that my children shall receive said stock absolutely and without any restrictions whatsoever, with full authority to divide the same in kind or liquidate said stock as they see fit.” In Item 5, the residue of the estate was left to his widow “to have and to hold absolutely as her own and without any restrictions whatever.” By Item 6, the widow was appointed executrix. It was stipulated that 7,494 shares of the stock of the Southern Maryland Oil Co., Inc. now stand registered on the books of the company in the name of “Elizabeth P. Swann, Trustee of Harold S. Swann Estate”, and that the widow and the four children named in the will still survive. ²¹¹ The “option” referred to in Item 4 of the will is explained by a written agreement filed as an exhibit, dated July 16, 1946.

This recites that Harold S. Swann and James W. Wills are the owners of one-fourth each of the capital stock of Southern Maryland Oil Co., Inc., the remaining one-half of the issued stock being owned by the respective wives of the parties. It recites that the parties had issued one share of voting stock in their joint names, with the right of survivor-ship, and that the survivor should have the “further option” of purchasing the stock of the party first dying. The agreement then provided “That the survivor of them, upon the death of the party first to die, if said deceased party has been predeceased by his wife, (and if not, upon the death of the widow of the party first to die) shall have the option of purchasing from the estate of the deceased all the stock of every class * * * registered as of July, 1946 on the books of said Company in the name of the party first to die less the one share otherwise provided for * * *” at a price to be determined by appraisal as therein provided. The agreement was declared to be binding on the heirs, personal representatives or assigns of the parties.

The appellant’s first contention is that Item 4 does not create a remainder in any of the children named. The argument is that all of the language following the phrase, “upon the death of my wife said trust shall cease”, relates only to the disposition in the event that she should have predeceased the testator. It is contended that no disposition is made of the corpus of the terminated trust, and that therefore it passes to the wife under Item 5. It is true that Item 4 has a curious verbal gap between the termination of the trust and the subsequent bequest of the stock or its proceeds.

But the subsequent language declaring, “* * * it is my will that my children shall receive said stock absolutely and without any restriction whatsoever * * can hardly be restricted to the alternative of the wife’s not surviving.