Richards v. Richards

Moore, J., delivered the opinion of the Court. On October 30, 1974, the Circuit Court for Montgomery County, sitting as an Orphans’ Court, 1 removed appellant, Julian I. Richards, an attorney and a resident of Virginia, from his office as personal representative of the estate of his aunt, Edith A. Parsons, who died domiciled in Montgomery County on February 19, 1973. The two appellees are his sisters. They are residents of Kenwood, Montgomery County, Maryland.

Appellant, and the appellees are the residuary legatees of the estate which has a gross value in excess of $650,000. The principal administration is, of course, in Maryland and there are ancillary administrations in the District of Columbia and in the Commonwealth of Virginia. In support of the appeal, Mr. Richards variously argues that a, personal representative in Maryland may not be removed after a motion for an Order to Show Cause, as was done in the instant case, but only upon a written petition pursuant to the provisions of Maryland Code (1974) Estates and Trusts, § 6-306 (c); 2 and that the court below (Mathias, J.) was arbitrary and capricious in removing him as personal representative, denied him due process of law and acted ³ upon insufficient evidence. After careful review of the proceedings below, we find no error and shall affirm.

I In August, 1971, appellant had petitioned the United States District Court for the District of Columbia for his appointment as Conservator of his aunt’s estate. In September, 1971, the Court instead appointed John E. Powell, Esq., of the District of Columbia Bar as Conservator. See, In re Edith A. Parsons, a Conservatorship, Julian I. Richards, Appellant, 328 A. 2d 383 (D.C. App. 1974). The conservatorship included a one-half interest in an apartment house in the District of Columbia having a total aggregate value of $400,000.

In the summer of 1972, the duly-appointed conservator was informed by the trustee of an estate owning the other one-half interest in the apartment house that he intended to sell the trust interest and would seek a partition if necessary. As noted by the District of Columbia Court of Appeals in the case above cited, the conservator desired to avoid a partition and sought consent for the sale from appellant and his two sisters. Only appellant objected. As Judge Nebeker stated for the District of Columbia Court of Appeals (p. 384): “The trial court held a hearing on October 20, 1972, to air Richards’ objections which included, along with certain irrelevancies, concern over the loss of rental income.

The trial court, perceiving the issue to be what would be in the best interest of the ward and the ward’s estate, found ‘that it is in the best interest of the estate of the ward, and of the ward individually, that the conservator be permitted to proceed to the private sale of the real estate in question ....’ The court then ordered the conservator to proceed with a private sale of the one-half interest.” Appellant noted an appeal from that Order on August 14, ⁴ 1973. The appeal was dismissed in the case cited on November 13, 1974. 3 During the pendency of the appeal, the conservator was unable to consummate the sale, as directed by the Superior Court, and Mrs. Parsons’ death on February 19,1973 terminated the conservatorship. The events which thereafter transpired were detailed in a sworn affidavit with numerous supporting documents filed by the sisters with their motion below for an Order to Show Cause. The documents related to the conservatorship in the District of Columbia, the ancillary proceedings in the decedent’s estate in the District of Columbia and in Virginia and included, as well, copies of administration papers filed in the principal administration in the Circuit Court for Montgomery County. 4 We find it appropriate to summarize the pertinent facts under the following categories: ADMINISTRA TION OF ESTA TE IN MAR YLAND Appellant, Julian I. Richards, was appointed as Executor of the Last Will and Testament of Edith A. Parsons by a codicil to her will executed on October 10, 1967.

(The original will executed on July 17, 1964, had named the appellees as co-executors. Both the original will and codicil were prepared by appellant who is a member of the District of Columbia Bar.) Appellant delayed taking action to obtain Letters of Administration in the aunt’s estate. The two sisters, acting upon the advice of counsel, filed a petition for ⁵ probate in the Circuit Court for Montgomery County, sitting as an Orphans’ Court, on May 8, 1973, and stated therein that their brother “advised petitioners he intends to take no action in decedent’s estate for six months from date of death and none has been taken to date.” 5 The petition of the sisters resulted in an Administrative Probate Order by the Register of Wills for Montgomery County on May 14, 1973, when the sisters were appointed personal representatives of the Estate of Mrs. Parsons and the will and codicil were admitted to probate. 6 This action of the appellees precipitated the filing by the appellant on May 15, 1973 of a petition for his own appointment as personal representative, as the executor designated in the Last Will and Testament of Edith A. Parsons. After a hearing before Judge H. Ralph Miller, an Order was signed on July 31,1973, whereby the sisters were dismissed as personal representatives, and by separate Order, on the same date, Judge Miller appointed appellant as executor under a nominal bond in the sum of $32,000. 7 Appellant was required, by the provisions of Estates and Trusts, § 7-201, 8 to file an inventory of real and personal property owned by the decedent on or before October 1, 1973, “within three months after his appointment.” The record shows, however, that the inventory was submitted by him in piece-meal fashion, separate schedules having been filed ⁶ with the Register of Wills over a period of time from January 2, 1974, to March 26, 1974, when the “Summary” sheet was filed — almost eight months after the date of his appointment.

The Summary showed a gross valuation of $659,247.37. It incorrectly included the real property of the decedent in the District of Columbia.and in the State of Virginia, as well as tangible personal property in Virginia, necessitating a revision at the direction of a Deputy Register so as to reflect real property in the sum of $45,000, the decedent’s one-half interest in real property in Montgomery County, rather than total real property in the sum of $297,000. Also within three months after the grant of letters, the executor was required by the provisions of Md. Code, Art. 81, § 155 to file a report under oath with the Register of Wills as to property held as joint tenants or other interests in property less than an absolute estate and of any transfers made by the decedent within two years of the date of death. Appellant’s report, dated April 24, 1974, was stamped as filed on April 25, 1974 — almost nine months after the date of his appointment.

Mr. Richards’ first account as executor, then required to be filed within eight months from the date when Notice of Publication is given, 9 was filed on May 2, 1974, some three weeks after it was due, without any request for an extension. It was developed, in questioning by Judge Mathias at the hearing below, that the account included certain receipts and disbursements relating to property outside the State of Maryland which the court did not consider properly a part of the Maryland accounting. When Judge Mathias executed the order removing appellant as executor under date of October 30, 1974, he also ordered that Suburban Trust Company be appointed as his successor. 10 ⁷ ANCILLARY PROCEEDINGS IN WASHINGTON, D. C. The appellees, Barbara and Elizabeth Richards, had qualified as Ancillary Executors of the estate of their aunt before the United States District Court for the District of Columbia whose jurisdiction was later transferred to the Superior Court of the District of Columbia. Following their dismissal by Judge Miller’s order of July 31, 1973, they permitted revocation of their Ancillary Letters Testamentary without contest and the issuance of Letters to their brother, the appellant.

As previously noted, appellant had, prior to the death of Mrs. Parsons, filed an appeal from an order nisi that the sale of the District of Columbia apartment house property for the sum of $400,000 in cash be ratified and confirmed and from a subsequent order of the Superior Court for the District of Columbia confirming the private sale of the ward’s one-half interest in the real estate. Appellant, upon becoming Ancillary Executor in the District of Columbia, did not withdraw his appeal from the orders pertaining to the sale of the apartment property. The proceeds of sale were, however, needed to pay debts of the estate and federal estate taxes in the total aggregate sum of approximately $200,000. His sisters accordingly filed a motion for a rule to show cause in the Superior Court of the District of Columbia as a result of which a hearing was held on November 8,1973.

Following that hearing, the Court by order dated December 10, 1973 ordered that appellant, as Ancillary Executor of the Estate of Edith A. Parsons, sign and execute within ten days all necessary documents and instruments to consummate the sale, subject to removal in the event of his failure or refusal to sign such documents. It was further ordered that appellant not pledge any assets of the estate subject to ancillary proceedings in order to borrow funds for any purpose nor remove any assets from the District of Columbia without first obtaining approval from the Superior Court; and that appellant return within ten days from the date of the order all cash assets subject to ancillary administration located outside of the District of Columbia, to a District of Columbia banking institution or else be ⁸ forthwith removed. It was further ordered that Mr. Richards give an additional bond in the penalty of $270,000 to “secure the interest of Barbara J. Richards and Elizabeth Ann Richards in said estate.” This provision was also under penalty of removal as Ancillary Executor. Appellant failed to comply with the order of December 10, 1973 and on December 20, 1973 was removed as Ancillary Executor.

He thereafter appealed from that order but there was no stay of execution. Accordingly, on January 7, 1974, the Superior Court, Probate Division, ordered that John L. Hamilton, Esq., a disinterested member of the Bar be appointed Ancillary Administrator d.b.n., c.t.a. upon an undertaking in the sum of $346,000. Appellant was also ordered to file an accounting of his administration forthwith. The sale of the decedent’s one-half interest in the District of Columbia apartment property was by order of the Superior Court dated May 7, 1974 authorized and directed.

Again Mr. Richards appealed that order without, however, a stay of execution. FEDERAL ESTA TE TAX RETURN Under the Internal Revenue Code 11 the Federal Estate Tax Return of the Estate of Mrs. Parsons was due and tax shown thereon was payable on or before November 19, 1973, nine months after the date of death. On November 5, 1973, appellant applied for and received an extension of six months to May 19, 1974 to file the return. At the hearing below a copy of the return was received in evidence showing a tax due in the amount of $130,931.37.

This return was filed prior to May 19, 1974 but was accompanied by a check in the sum of $10,000 only, as a part payment. On July 8, 1974, the Internal Revenue Service notified Mr. Richards that the sum of $131,910.59 was due by July 25, 1974 and that this sum included a penalty in the sum of $5,741.94 and interest in the amount of $5,236.68. When the court below inquired of Mr. Richards as to why he did not pay the federal estate tax on time and stated, “It ⁹ looks to me as if you cost the estate about $11,000 by not paying the federal estate taxes on time,” the appellant replied: “I, because of the appeal which was pending from the judicial sale prior to the decedent’s death, and its pendancy throughout the early months of the administration, and its pendancy at this time, incumbered my ability to exercise my duties.” A petition was promptly filed in the Superior Court by the Ancillary Administrator d.b.n., c.t.a., John L. Hamilton, Esq., for an order authorizing and directing him to make payment of the federal estate tax. This authorization was granted by order of the Superior Court of the District of Columbia dated July 19, 1974.

Mr. Richards also appealed from that order. ANCILLARY ADMINISTRA TIONIN VIRGINIA The primary asset of the decedent subject to administration in the State of Virginia was certain improved real property located at 109 Bay Colony Drive, Virginia Beach. Appellant did not obtain Letters as Ancillary Executor in Virginia until September 28, 1973, and 12 days thereafter, on October 9, 1973, he communicated with appellees’ attorney, David B. Nicholson, Esq., stating that should it be the desire of his clients, Barbara and Elizabeth Richards, to disclaim their interest in the aforementioned real property and “thereby avoid the necessity of paying inheritance taxes thereon,” that such an election and filing of the disclaimer would have to be accomplished by December 19, 1973, ten months from the date of decedent’s death. The following colloquy took place between the court and Mr. Richards at the hearing below concerning the proposal to his sisters: “THE COURT: Well, you wanted them to disclaim their interest, which was a two-thirds interest, right?

You had a third. ¹⁰ MR. RICHARDS: I had in mind that they do that only if it could be part and parcel of a settlement, which would save some tax money if they did disclaim. THE COURT: Well, why didn’t you offer to disclaim your own third interest? MR.

RICHARDS: That’s my home, Your Honor. I reside there. THE COURT: Well, how much money would it have saved in taxes? MR.

RICHARDS: Well, it would have saved $600. THE COURT: But you wanted them to disclaim an interest worth $36,000 or $37,000 in order to save $600 to $800 in taxes? MR. RICHARDS: That’s what I wanted to make clear.

THE COURT: That’s quite a lot to ask of them, isn’t it? MR. RICHARDS: No. I had no intention of swindling my sisters out of their equity in the house, and I want to make that clear to Mr. Nicholson.” At the conclusion of the hearing Judge Mathias referred to Mr. Richards’ failure to comply with the orders of the Superior Court of the District of Columbia relating to the consummation of the sale of the apartment house to raise the cash necessary to pay taxes and debts, his subsequent removal as Ancillary Executor and the appointment of Mr.