Kennedy v. Dickey

Page, J., delivered the opinion of the Court. In August, 1896, the late William J. Dickey died, leaving a last will by which he devised and bequeathed his entire estate to his wife and two sons, George A. Dickey and William A. Dickey, in trust to hold for seven years from the day of his death, paying the income therefrom to his wife and children- ²⁹⁷ and the daughter of a deceased child in equal proportions, with power to the said trustees to continue the business in which he was engaged, and to manage in all respects his estate (including the power to make sales of property), as fully as he had power to manage it himself; and at the end of that period to divide the estate among his wife and children and the daughter of his deceased grandchild, “as it would have been divided had he died intestate,” except that before doing so, they should pay $60,000 to his son, William, as a special legacy. The will also appoints the same persons to be his executors. By a codicil he further devised that Mrs. Dorsey should hold her share of the estate for life only, and at her death it should be the property of her son, Edgar Dorsey, absolutely.

The persons so named in the will to be the executors and trustees, qualified as executors and proceeded to administer the estate. Subsequently, that is on 25th April, 1898, they as trustees and in their own right filed a bill in which they alleged they had closed their administration of the estate, and showed by itemized statements the character and amount of the estate that passed to them as trustees, and after proper proceedings the Court by its decree assumed jurisdiction of the trust. At the expiration of the seven years (the trustees having in the meantime conducted the business), the survivors (Mrs. Dickey having then died), made a report showing their proceedings and disbursements in the management of the estate, and filed therewith a “proposed plan of division,” among the parties entitled. To this, Lizzie A. Kennedy and Edgar A. Dorsey filed exceptions, and from the decree of the Court passed 21st December, 1903, directing the manner in which the estate should be divided, both parties have appealed.

We will proceed to consider the objections made, as presented in the exceptions. First. It is objected that there is an error, as appears on the face of the account, by which each of the appellants and appellees, have been awarded $66.67 less than their respective shares, even if the method of distribution submitted by the ²⁹⁸ trustees be approved. This is a mere matter of calculation and if the averment is correct, the statement must be properly-adjusted.

Second. Objection was made to the allowance of interest upon the legacy of $60,000 to Wm. A. Dickey, to be paid on the expiration of the seven years, as set forth in the will of Mr. Dickey. That period expired August 13th, 1903, and interest was charged up to first September, 1903.

The trustees also charged themselves with, interest up to the'first September, on the amount to be paid by them, derived from the sale of the deceased’s interest in the firm property. The account shows a settlement as of the first September; and if the trustees charged interest up to that time, they ought also to be allowed interest on the amount coming to them. Third. The allowance of commissions on the sum of $44,737.50, the total of investments made by the trustees is objected to.

It was conceded there was a mistake in asking an investment commission on the whole proceeds of the Eutaw street property. The balance of the amount $14,737.50 commissions at 2^ per cent was allowed by the lower Court. We understand from the brief of the appellants that this is not objectionable to them, or any of them. Fourth.

As to the allowance to the trustees of commissions on.......................$581,776 11 This sum is made up of appraised value of . securities and effects in the executors inventory and cash $436................. 417,157 11 And addl. valuation by the trustees....... 164,618 00 #581,775 n The last sum of $164,618.00 was added by the trustees to the original valuation as made by the appraisers; but why that was done or by what authority is not shown by the record. On the original valuation of $417,157.11 the appellees as executors have received full commissions. The Court below decided that to allow commissions on this account now would be to subject the corpus of the estate to two commis ²⁹⁹ sions which was never done in that Court. This seems to be in conformity with well established principles.

The items contained in the account are parts of the principal of the trust estate, and as was said in Jenkins v. Whyte & Horwitz, 62 Md. 434 , when the trustees took possession of it, “they could not be considered as collecting it.” It was, so far as these trustees are concerned, a mere matter of bookkeeping, whereby it was transferred from themselves as executors to themselves as trustees. For the collection of accruing interest, they were entitled to receive commissions, to compensate them for their trouble and expense. If services had been rendered for the collection of the corpus, the Court had power to make an allowance out of the fund. But there is no evidence in the record that the trustees ever did more than hold the securities and collect the interest.

It was their duty, it is true, to give the securities proper attention so that they should ascertain, in time to take steps, if necessary, to prevent loss. And if they had found it necessary to be active in order to preserve the fund, it would be within the power of the Court to award them such suitable compensation as might be necessary and proper. And this is the reason of the rules laid down in Abell v. Brady, 79 Md. 98 , where it is said, that the compensation to be allowed to a conventional trustee, is as compensation “for actual services rendered by him in the execution of his trust,” “as a reasonable and just indemnity for * services rendered by him in the discharge of his duties.” N. C. R. R. v. Keighler, 29 Md. 572 : Natl. Bk. v. Dulaney, 96 Md. 172 ; Sanderson v. Pearson, 45 Md. 484 .

Fifth. As to the commissions on $408,866.83; made up as follows: Sale of furniture..............................................$ 3,119.21 Int. due Dickey at time of his death by firm of W. J. Dickey & Sons.................................... 4,646.19 Decedents int. in the firm of W. J. Dickey & Sons........................................................... 363,384.44 Profits.......................................................... 36,458.13 Int. on do. from Aug. 13 to 1st Sept.................... 1,258.86 ---$408,866.83 The furniture was appraised, and the appellees, as executors, . have been already allowed a commission on its appraised value, ³⁰⁰ and they are now entitled to commissions only upon the excess of the sales over the appraised value. The sum of $4,646.19 was due at the time of the death of Mr. Dickey, and should háve been collected by the executors, and we agree with the lower Court that it constitutes part of the corpus; therefore the trustees are not entitled to commissions on that amount. Jenkins v. Whyte, et al., 62 Md. 434 ; Whyte et al. v. Dimmock, 55 Md. 455 .

Sixth. The objection is also made that the proceeds of the sale of the Eutaw street house is distributed as personalty, whereas it should have been treated as realty and so divided. It appears that this property was sold by the trustees in 1902, with' the consent of all the parties interested, and the proceeds, $30,000, invested in certain bonds. Whether these proceeds shall be treated as personalty or not for the purposes of distribution must depend upon the construction to be placed upon the intention of the decedent, as expressed in his will.

If he had positively directed the trustees to make the sale, it is well settled that there would be an equitable conversion. Sloan v. Safe Deposit & Trust Co., 73 Md. 239 , but if there is only a discretionary power of sale, the conversion would not take place until the sale had actually taken place. 2 Lewin on Trusts, 1274, 8 ed. This Court in Cronise v. Hardt, 47 Md. 436 , said: “The conversion of real into personal property or personal into real, under a power in a will, takes place only for the purposes for which it is authorized; and so far as these purposes do not extend, or in so far as any of them do not take effect in fact, or in law, the property is considered as remaining in its former condition, and passes accordingly.” “And where the land is properly sold by the trustee or executor and there is only a partial disposition of the proceeds of sale in fulfillment of the objects for which the sale was made, then the surplus belongs to the heir or devisee, as the case may be, as money, and not as real estate.” It is necessary therefore to examine the will of Mr. Dickey, to determine 1st, the nature and extent of the power conferred upon the trustees, and 2nd, whether ³⁰¹ after the disposition of the proceeds of sale, contemplated by the will, there is any surplus remaining that can be regarded as realty in the hands of the trustees, and to be distributed accordingly. By the third clause of his will the testator devised and bequeathed all his estate in trust to his trustees with authority to manage it, including the power to make sales as fully as the testator himself “had power.” The power to make sales was conferred for the benefit of the estate, to be exercised by the trustees as fully as an owner could have done.

It included the right to make all such sales as the trustees deemed would be beneficial to the estate, and to invest the proceeds as their judgment should dictate. Having so exercised the power conferred upon them, it is required of the trustees at the end of seven years to divide the estate as it should then exist among his wife and children and daughter of his deceased child as if he had died intestate; that is to say that the division of the estate, then in their hands, should be made in the same manner as it would have been had the testator then died without leaving a last will. The estate and the rights of his wife and children thereto must therefore be determined by the kind and character of the property in the