Ridgely v. Pfingstag

Markell, J., delivered the opinion of the Court. Opposing contentions in this case relate to interpretation of (1) a decision of this court sixty-five years ago (Heald v. Heald, 56 Md. 300 ) construing the will of ²¹⁴ William Heald, who died in 1868, and (2) acts, omissions, statements and legal proceedings, on the part of heirs, or successors in interest to heirs, of the testator during these sixty-five years. These contentions have been ably presented in oral argument and. in full, but compact, well-indexed briefs and appendices and have been carefully considered. Our conclusions permit us to omit mention of many of the facts, and some of the contentions, presented.

The testator died in November, 1868. His will was dated March 11, 1865, a codicil (not now material) June 10, 1867. He left three adult sons, William H., John H. and Howard, two infant children, Charles M. and Alice H. (later Groverman), and three infant children, William, Charles and John Creswell, of a deceased son, Edward, and four infant children, Mary, Josephine, William and Eleanor, of a deceased daughter, Adeline (Heald) Spurrier.

He divided his estate into seven parts, three of which he gave absolutely to his adult sons, whom he also appointed his executors. Two parts he gave to his son John H. in trust, for Charles M. and Alice H., respectively, for life, then for their surviving children for their lives, with remainder (held void for remoteness) on the death of any of the children to the child’s surviving issue absolutely, and with other contingent provisions. The other two parts he gave to his son John H. in trust, for Edward’s children (Item 6)- and the Spurrier children (Item 10), respectively, for their lives, with survivorship among' them on the death of any without issue, then for their surviving children for their lives, with remainder (held void for remoteness) on the death of the children of any one of the grandchildren (of the testator) to the testator’s right heirs absolutely, with other contingent provisions. The provisions of Items 6 and 10 are generally similar but in some respects substantially different.

By Item 10 the testator directs that one of the seven shares (after a specified deduction) be invested by his executors “in permanent ground rents” in Baltimore, ²¹⁵ in the name of his son John H. Heald, “to be held by him and his heirs in trust * * * for the use and benefit of Mary, Josephine, William and Eleanor Spurrier, * * * Share and Share alike, during the term of their respective natural lives, * * * to permit them * * * to receive and to collect the said rents as they may fall due, during said term of their respective natural lives, with no power to either or all of them to dispose of the said equitable life estate, or any part thereof, in any way or to incumber the same it being my will and intention that they * * * shall have no control over any part of the property out of which said rents and profits issue, except the yearly rents and profits thereof, after the same shall have been due, and on the death of either of the said children of my said daughter Adeline, without issue living at the time of his or her death, then, in further trust for the survivors or survivor of them, (the said Mary, Josephine, William and Eleanor) in the same way as and with no greater control over the said deceased child’s share of said rents than the same was held and enjoyed by said child. And on the death of either of the said children of my said daughter Adeline, leaving issue as aforesaid, then in further trust for the use of the children of the body of such deceased child living at the time of his or her death share and share alike during the term of their respective natural lives and from and after the death of the said children of such deceased child then to my right heirs Share and Share alike forever absolutely and freed from said trust.” In certain contingencies “the Share of the proceeds of the sale” of any property accruing to the Spurriers (under Items 2, 3, 4, 5, 6, 7 or 8) are to be “reinvested in permanent ground rents” in Baltimore, in trust “in the same way” during their respectives lives and after the death of either of them. Items 2, 3, 4, 5, 6, 7 and 8 contain corresponding provisions for sale and reinvestment of such accruing shares of the Spurriers. Item 11 confers on the executors full power to sell real estate “for the ²¹⁶ purpose of executing, fulfilling and carrying out the trusts or any of the provisions” in the will.

On January 10, 1880 John H. Heald, trustee, filed a bill against the other parties in interest for the construction of the wilk This case culminated in the decision of this court in Heald v. Heald, supra. Construing Item 10, this court said: “In regard to the devise to the Spurrier children we are of opinion: “1st. That they take an equitable life estate with survivorship on the death of any of them without issue. “2nd. That their children take equitable estates for life, in the shares of their parents. “3rd.

That the devise over to the testator’s heirs after the death of the children of each of the named grandchildren is void, and the equitable fee descended on the death of the testator, to those who were then his right heirs, subject to the successive equitable estates for life. “Survivorship by implication would seem to exist among the children of each of the Spurrier children, because the attempted devise over to the testator’s heirs is made to take effect from and after the death of ‘said children of said deceased child’.” 56 Md. 312, 313 . In 1869 Mary Spurrier died intestate, unmarried, without issue. In 1879 William Spurrier died intestate, leaving three sons, Howard G., Walter and Ernest L. On February . 6, 1912 Josephine Spurrier died intestate, unmarried, without issue. On December 8, 1930 Mrs. Eleanor Spurrier Brunt died testate, a widow, without issue.

Walter Spurrier died intestate in February, 1916, Ernest L. Spurrier on July 27, 1929 and Howard G. Spurrier in May, 1943. On April 20, 1900 Ernest L. Spurrier and wife sold and conveyed to Auxiliary Realty Company, a corporation controlled by David Stewart, all Ernest’s interest, “legal or equitable, vested or contingent, in possession or expectancy,” under the will of the testator, or as heir of the testator or of William Spurrier. On February ²¹⁷ 13, 1902 Howard G. Spurrier’s interest, and on September 27, 1902 Walter Spurrier’s interest, were similarly sold and conveyed to Stewart’s wife. By mesne conveyances the interests of the three Spurriers passed on November 29, 1916 to Stewart, trustee for his daughter, and on June 12, 1928 to Stewart individually.

John H. Heald died on February 2, 1896. His eldest son, and heir at common law, John M. D. Heald, died in February, 1916. Edward Ernest Heald was the only son, and heir at common law, of John M. D. Heald. On January 30, 1900, ten days after acquiring Ernest’s interest, Stewart’s corporation filed a bill for assumption of jurisdiction of the trust created by Item 10, appointment of a trustee in place of John H. Heald deceased, and to surcharge the accounts of the administratrix of Howard Heald and John M. D. Heald, executor of John H. Heald, as to property held in trust under Item 10.

In this bill it was alleged that by the decision of this court Eleanor (Spurrier) Brunt, Josephine Spurrier, Walter, Howard G. and Ernest L. Spurrier had equitable estates in the property covered by Item 10, “with cross remainders until they are all dead.” The answer of Josephine L. Spurrier and Eleanor Brunt and husband admitted that under the decree of this court the descendants of Adeline Spurrier “take equitable estates with cross remainders over as therein determined.” This suit never went to decree. On March 27, 1905 Mrs. Stewart and husband and Stewart’s corporation filed a bill against Josephine Spurrier, Eleanor Brunt and husband, and all other persons (except their three Spurrier assignors) who were heirs of the testator at the time of his death, or heirs or assigns of such heirs, for the sale of an irredeemable' ground rent of $990 (then in default) on Postoffice Avenue property and investment of the proceeds so as to enure “to the use of the same parties now entitled to the ground rent.” In the bill it was alleged that this court had decided that the trust would continue “during the lifetime of the longest liver of the children and grand ²¹⁸ children of Adeline Spurrier, who would have equitable life estates therein with cross remainders.” The answer of Josephine Spurrier and Eleanor Brunt admitted that the will had been construed by this court and the construction “as thereby determined” is binding, but left plaintiffs “to the proof of their claim of title” and “of their pretensions in regard thereto.” The answer of John M. D. Heald, individually and as trustee, admitted the death of John H. Heald, trustee, and the construction of the will by this court, and that “by operation of law the legal title to the trust property * * * descended to and is vested in him under the statute,” but left plaintiffs “to the production of the will * * * for the ascertainment of the character of the trust” as determined by this court. The answer of Alice H. (Heald) Groverman and husband admitted “the allegations of the bill”-and consented to “the passage of such decree as may be proper herein.” On December 26, 1907 a decree for sale was passed, appointing William H. Dawson and David Stewart trustees to' sell.

The trustees reported a sale, which on May 1, 1908 was finally ratified, for $5250, including $1250 cash and a $4000 mortgage. On April 23, 1913, on the petition of “John M. D. Heald, trustee in the above entitled cause,” he was granted leave to “invest of the trust funds in his hands” $3913.02 in the purchase of three redeemable ground rents of $75 each on Westwood Avenue properties. On July 25, 1913 he reported payment to him, “trustee in this cause,” of the mortgage for $4000, with interest, investment of $3913.02 thereof in the Westwood Avenue ground rents, payment of the interest to the tenants for life, leaving $86.98 in his hands. On June 1, 1916, on petition of Eleanor Brunt in the 1905 case and suggestion of the death of John M. D. Heald, trustee, Thomas J. Lindsay was, by order, appointed “trustee to administer the trusts in this cause created by the will” of the testator, was required to give bond for $2000 for performance of his trust, “as substituted trustee under the will * * * for the children of ²¹⁹ Adeline Spurrier,” and was authorized to receive from the administratrix of John M. D. Heald, “all title deeds, evidences of debt, bank books, etc.” On March 2, 1928, on petition of Eleanor Brunt, averring that she was “a life-tenant of one-half interest in the trust estate” and as such was “entitled to one-half of the income,” and reciting the death of Thomas J. Lindsay on October 21, 1927, George Carey Lindsay was, by order, appointed “substituted trustee to administer the aforesaid trust [“for the benefit of the children and descendants of Adeline Spurrier”] created by the will” of the testator, “with all the powers and duties” of Thomas J. Lindsay.

On May 17, 1944, a petition of George Carey Lindsay, “substituted trustee,” recited that there had been on deposit prior to his appointment the sum of $419.75, that there was then on deposit (after failure of the Baltimore Trust Company) $268.74, that “in addition thereto” he had three Westwood Avenue ground rents of $75 each, and that he desired “to resign and retire from said trusteeship,” and prayed an order permitting him to do so. A show-cause order was passed the same day. On October 19, 1944, by order, Mr. Lindsay was released and discharged from the further execution of the trust and James C. Burch was appointed substituted trustee in his place. On February 11, 1913 Mrs. Stewart and husband and Stewart’s corporation filed another bill against all parties in interest, under Item 10 of the will or as heirs or successors in interest to heirs, for the sale of four irredeemable ground rents of $60 each on Conway Street properties and investment of the proceeds.

In the bill plaintiffs asserted equitable title to a “one-half undivided interest during the lives of Howard G., Walter and Ernest L. Spurrier, and the survivor of them, with the right to the whole equitable title after the death of Eleanor E. Brunt and until the last of said Howard G., Walter and Ernest L. Spurrier shall die.” None of the defendants in their answers either admitted or denied this assertion of title, but a number assented to the proposed ²²⁰ sale and reinvestment. On June 27, 1913 a decree for sale was passed, áppointing Thomas J. Lindsay trustee to sell, and directing him to bring the purchase money into court “to be re-invested under its orders and directions in the purchase of ground rents, or other securities approved by the Court, such re-investments to be made in the name of John M. D. Heald, trustee in succession under the will,” to abide the terms of the will as to “Adeline Spurrier, her children, their descendants and the persons entitled in remainder.” An auditor’s account finally ratified August 9, 1913 charged Mr. Lindsay, trustee, with $92 “accrued ground rent on Conway Street rents sold and awarded this accrued rent one-half to Stewart’s wife and his corporation and one-half to Mrs. Brunt. Another auditor’s account, finally ratified October 24, 1913, awarded a balance of $121.86 to John M. D. Heald, substituted trustee, to be held under the terms of the will, and also awarded $23.37 income (interest on bank deposit) in the same proportions. Pursuant to a report and an order passed September 24, 1913, Thomas J. Lindsay, trustee, had purchased seven redeemable ground rents, one for $45, the others for $42 each, on Lakewood Avenue properties, in the name of John M. D. Heald, substituted trustee under the will.

On June 6, 1933 the owners of the leasehold interest subject to one of the $42 Lakewood Avenue ground rents filed a petition in the 1913 case reciting that “John M. D. Heald is now dead and no person has been substituted trustee in his place * * * to hold title to the said rent,” and even if such a substituted trustee had been appointed he would have “no power of sale over this ground rent” so that he could convey title to petitioner, and that petitioners desired to redeem the ground rent, and praying that a trustee be appointed to convey the reversion and ground rent of $42, and upon receipt of payment of the redemption money with all accrued ground rent, to execute and deliver a deed to petitioners. On the same day, by order (erroneously dated February 6, 1933), David Stewart was appointed “substituted trustee in the place ²²¹ * * * of John M. D. Heald, substituted trustee” under the will, “as hereinbefore set forth,” and was directed to collect from petitioners the redemption money in payment of the $42 ground rent and upon receipt thereof with accrued ground rent to convey to petitioners the reversion and ground rent by deed, and to render to the court “a complete report of his proceedings hereunder immediately after consummating the conveyance * * * of the reversion and * * * ground rent aforesaid.” On June 8, 1939 “David Stewart, substituted trustee under the will,” on his own petition, was by order “authorized and empowered to execute and deliver” to the owners of the leasehold, a deed for another of the $42 Lakewood Avenue ground rents upon payment of $700 and accrued ground rent. On July 26, 1939, September 13, 1941 and February 16, 1942 respectively, on similar petitions and by similar orders, he was authorized to execute and deliver to the leaseholders deeds for two more $42, and the one $45, Lakewood Avenue ground rents, upon payment of $700 and $750 respectively. Pursuant to these five orders he conveyed these five Lakewood Avenue ground rents to the leaseholders and received the redemption prices, aggregating $3550.

He never reported to the court any of these redemptions of ground rents. He deposited these trust monies in his personal bank account, in which he always had a balance far in excess of the trust monies. When he heard of the death of Howard G. Spurrier he transferred the $3550 into a separate bank account in his name as trustee. On January 30, 1940 “David Stewart, substituted trustee under the will,” on his petition and by an order similar to those with respect to the four Lakewood Avenue ground rents, was authorized to execute and deliver to the City a deed for a $40 irredeemable ground rent on Fayette Street property (which the City proposed to condemn for street widening) upon payment of $800.

This Fayette Street ground rent had not been mentioned in the bill, or acquired in the proceedings, in the 1913 ²²² case. It was never actually sold or redeemed under this order in the 1913 case. On November 17, 1943 a daughter of Walter Spurrier, Mrs. Eney, filed a petition in the 1913 case, alleging that Howard G. Spurrier had died in May, 1943, intestate and unmarried, that there had been no accounting by Stewart, substituted trustee, for any of the proceeds of redemption of the Lakewood Avenue ground rents or for “any of the sums or funds collected” under Item 10, that this court had indicated that survivorship existed among the children of Adeline Spurrier’s children, that upon the death of Howard G. Spurrier the last of the successive life estates ceased and “the equitable fee” became distributable to the successors in interest to the heirs of the testator at the time of his death, and that the conveyance of Walter’s interest to Stewart’s wife was only a mortgage, and praying that Stewart, substituted trustee, be removed and some person appointed in his place as substituted trustee, and that he account “for all funds collected by him as substituted trustee under the will * * * or collected by,him in any other capacity” from any part of the property intended to be held under Item 10 for the benefit of Adeline Spurrier’s children or her children’s children. On December 1, 1943 Stewart’s answer to this petition was filed, in which he denied that the conveyance of Walter’s interest was .only a mortgage or that petitioner had any interest in the trust property, and alleged that he was guilty of no improper conduct in not investing the redemption money as it came in, that the sums of $700 were difficult to invest, especially in ground rents, that he never used any of the trust money, and that those interested had benefited by his not investing the funds, which (if invested) would have been depleted by costs through a sale of the investments under a partition proceeding.

On the same day, December 1, 1943, Stewart died at the age of 87. On December 2, 1943, on petition of the same petitioner in the 1913 case, reciting Stewart’s death, James C. Burch was, by order, appointed “substituted ²²³ trustee in the place * * * of David Stewart, substituted trustee, deceased” and required to give bond for $3550. On December 24, 1943 Stewart’s executors (the appellants) reported the receipt by Stewart of $3550 from redemption of five Lakewood Avenue ground rents, and also receipt of $42 ground rents collected by him since the death of Howard G. Spurrier but before he knew of Howard’s death, and stated that this $3592 had been turned over to James C. Burch, substituted trustee. On June 27, 1944 appellants filed a petition to rescind the order of December 2, 1943 appointing Mr. Burch substituted trustee.

Mr. Burch answered at length, appellants demurred to his answer, and on August 17, 1944, Judge Henderson signed an order sustaining the demurrer, rescinding the previous order, and reciting that “this proceeding” (the 1913 case) related solely to the sale of the Conway Street rents and to the reinvestment of the proceeds thereof, and not to any other portion of the property held under Item 10, that “any and all trusts” under Item 10 “had ceased and determined” prior to December 2, 1943, and that “the legal title absolutely or in fee simple had vested in possession as well as in interest in the heirs and assigns of William Heald living at the time of his death or their representatives.” On December 1, 1939 Charles M. Heald, last surviving child of the testator, died without issue. In that contingency, under Items 4 and 7, his share was to go to the then living issue of the testator’s then deceased childred, per stirpes and not per capita, the Spurriers’ share to be sold and the proceeds reinvested and held in trust under Item 10. Heald v. Heald, supra, 56 Md. 305, 310 . On October 10, 1941 the substituted trustee under Items 4 and 7, a leaseholder who desired to redeem a ground rent, and seven other persons (including descendants of the testator) filed a bill against more than a hundred defendants for final distribution of the estate and property under Items 4 and 7, sale of a ground rent for redemption, and sale of all other ground rents for distribution.

In his answer, filed February 9, 1943, David ²²⁴ Stewart denied that he was trustee under Item 10. The proceedings in this 1941 case were prolonged and voluminous. We do not think any of these proceedings or the assertions or denials, correct or mistaken, in them, are material in the case at bar. After the death of Mary Spurrier in 1869, the income, i. e., the rents, under Item 10 were received in equal one-third shares by her sisters, Josephine and Eleanor, and her brother, William.

After the death of William in 1879, his third was received by his three sons until their interests were sold to Stewart’s corporation and Mrs. Stewart, and afterwards was received by the Stewarts. After the death of Josephine in 1912, the income was received one-half by Mrs. Brunt and one-half by the Stewarts. After Mrs. Brunt’s death in 1930, all the income was received by Stewart until Howard’s death in 1943. During the life of any of the four Spurrier children or the three grandchildren—and during Stewart’s life (unless by implication by Mrs. Eney’s petition of November 17, 1943)—apparently nobody ever disputed Stewart’s position that Item 10 created cross-remainders between the children and the grandchildren.

If this position was not correct, then Stewart was never entitled to receive more than one-third of the income under Item 10. After William’s death his widow married Clarence H. Forrest and died in 1929. Until his sons sold their interests to the Stewarts their income was collected for them by their mother or step-father, Mr. or Mrs. Forrest, afterwards by Stewart v for himself. From 1892 Josephine’s income until her death in 1912 and Mrs. Brunt’s income until her death in 1930 were collected for them by the real estate firm of George W. Lindsay and Sons.

Before 1892 John H. Heald had received their income for them, not under claim of right or duty as trustee. On September 7, 1892 he gave the Lindsays a letter stating that, as Mrs. Brunt and Josephine had appointed the Lindsays their agents, the Lindsays were “entitled to receive all ground rents due them” which he ²²⁵ had theretofore received, and bearing a notation that Mrs. Brunt and Josephine had “the right to collect the ground rents under the will,” as would “appear on examination of said will,” and that each was entitled to one-third of each rent. Stewart continued to collect all his rents, except the Westwood Avenue rents acquired in 1913 by re-investment in the 1905 case. After the acquisition of the West-wood Avenue rents, or at least after the death of John M. D. Heald and the appointment in 1916 of Thomas J. Lindsay as trustee in the 1905 case, the Lindsay firm, as agents, collected the Westwood Avenue rents not only for Mrs. Brunt but also for Stewart, deducting collection charges and the premium on the trustee’s bond, and remitting half of the balance to each.

Until 1927, Stewart’s half was remitted in the name of his corporation. On November 17, 1927, Stewart wrote the firm that for many years his Westwood Avenue rents had stood in the name of “David Stewart, Trustee,” (i e., trustee for his daughter), and his corporation had no interest in them, and asking them to make the account on their books “Mrs. E. E. Brunt & David Stewart, Trustee.” The firm complied with this request, and as Stewart never notified them of the subsequent conveyances from Stewart, trustee, to Stewart individually, checks and accounts thereafter were sent to Stewart, “trustee.” After Mrs. Brunt’s death on December 8,1930, Stewart on March 31, 1931 wrote the Lindsays that under the will the entire income was then payable to him during Howard’s life, that in the future he would send out the bills for the entire rent [other than the Westwood Avenue rents] and asking them to send him the income which had accumulated since Mrs. Brunt’s death. On April 1, 1931 the Lindsays complied with this request, and thereafter collected no rents for Stewart except the Westwood Avenue rents. On December 27, 1943 a bill was filed by James C. Burch, substituted trustee under Item 10, and Walter Spurrier’s daughter, Mrs. Eney, and her husband, against ²²⁶ some 150 defendants for sale, in lieu of partition,::.of ground rents.

On May 9,1944 Mrs. Pfingstag, (appellee), granddaughter of Alice H. (Heald) Grovernian, was made a party plaintiff. On demurrer by Stewart’s executors, Mr. Burch, trustee, and several classes of unnecessary defendants were eliminated as parties, and Stewart’s executors were made defendants as trustees, as well as executors. The amended bill filed September 20, 1944 names some 75 defendants.

This case will be referred to as the Partition Case. On May. 4, 1944 the widow and some of the descendants of Ernest Spurrier filed a bill against the appellants to have the Spurrier conveyances to the Stewarts declared mortgages and not absolute deeds. This case will be referred to as the Mortgage Case. On March 27, 1944 Mr. Burch, as trustee under Item 10, and Mrs. Pfingstag (appellee) filed a bill against the appellants for an accounting.

This case will be referred to as the Accounting Case. On demurrer to the bill (which was sustained) it was ordered that Mr. Burch, as trustee, be stricken out as a plaintiff with leave to Mrs. Pfingstag, plaintiff, “to file an amended bill.” On December 18, 1944,. Mrs. Pfingstag filed an amended bill “in her own right and in behalf of all the heirs” of the testator “who might be entitled to share in the funds hereinafter mentioned.” She alleged that from December 8, 1930 to February 6, 1933 David Stewart, individually, collected the entire rents under the trusts under Item 10, “and neglected to account for the same,” that since February 6, 1933 “David Stewart, substituted trustee,” collected the rents and failed and neglected to account “for the said rents collected by him which your complainant claims is rightfully due her”; that upon the death, of Mrs. Brunt on December 8, 1930,- “the income of two-thirds of the entire trust” under Item 10 “passed to the trustee for the use and benefit of the descendants” of the testator or his “heirs at law,” .The bill prayed that Stewart’s executors account “for- all rents; profits, issues, incomes and interest- collected by the said ²²⁷ David Stewart, individually and as Substituted Trustee, from the trusts” under Item 10, from December 8, 1930 to