Sands v. Church of the Ascension & Prince of Peace

Delaplaine, J., delivered the opinion of the Court. On December 5, 1903, James B. Smallwood and John Black, members of the vestry of the Church of the Ascension, then located on the corner of Arlington and Lafayette Avenues in Baltimore, presented to the vestry $20,000 in bonds together with the following letter: “We have this day given you $20,000 in bonds bearing 5% interest to be applied to the payment of the Ground Rent on the Church of $1,000 per annum as it may fall due during, the year. “James B. Smallwood gives $10,000 5% bonds of the University of Maryland. ⁵³⁹ “John Black gives $10,000 5% bonds of the Brooklyn Elevated. “These bonds are to be deposited in a box in the Mercantile Trust and Deposit Co. in the name of the Vestry of the Church of the Ascension. * * * “It is our wish that the income from these bonds be used only for the payment of the Ground Rent as it becomes due and said income is not to be used for any other purpose whatsoever, neither must the income of the bonds or the bonds be used to borrow money on. Further if at any time the Vestry can buy out or extinguish the Ground Rent at a price satisfactory to them, they can sell the bonds and apply the proceeds to said extinguishment of the Ground Rent. Also, if at any time the Vestry can sell the bonds and buy other securities that they may deem better or more profitable, they can do so, but must replace the securities so purchased in place of those sold.” In 1931 Ascension Church united with the Church of the Prince of Peace under the name of Church of the Ascension and Prince of Peace, and in 1932 the vestry agreed to sell the abandoned church property, subject to annual ground rent of $1,000, to the Convention of the Protestant Episcopal Church of the Diocese of Maryland for the sum of $40,000.

The Convention assigned the contract to St. James First African Protestant Episcopal Church. The contract of sale made no reference to the bonds. In 1941 a certified public accountant found the letter written by Smallwood and Black, both of whom died more than a quarter of a century ago. This suit was brought to determine the ownership of the bonds and the sum of $7,093.33, which has accumulated from the coupons and is now held by the Mercantile Trust Company as custodian.

It was contended by the residuary legatees under the donors’ wills (appellants in Nos. 22, 23, 24 and 25) that the bonds were impressed with a trust, and when the bonds were no longer needed for the purpose intended, a resulting trust arose in favor of the donors’ ⁵⁴⁰ estates. _The chancellor decreed that the Church of the Ascension and Prince of Peace owned the bonds and cash absolutely. In England the High Court of Chancery laid down the invariable rule that a trust should never be presumed by implication of law except in case of absolute necessity. Lord Nottingham said: “The reason of this rule is sacred; for if the Chancery do once take liberty to construe a trust by implication of law, or to presume a trust unnecessarily, a way is opened to the Lord Chancellor to construe or presume any man in England out of his estate * * Cook v. Fountain, 3 Swanst. 585, 592. It has been held in Maryland that the party seeking to establish a resulting trust has the burden of proof.

Vogel v. Vogel, 157 Md. 147, 153 , 145 A. 370 . To establish a resulting trust, a party must produce clear and satisfactory evidence of circumstances which raise an inference that the person transferring the property did not intend to give to the donee the beneficial interest in the property transferred. Such a trust arises only where it may reasonably be presumed to be the intention of the parties as determined from the facts and circumstances existing at the time of the transaction out of which it is sought to be established. A court of equity declares a resulting trust in favor of the donor for the purpose of carrying out what appears from the circumstances would probably have been his intention, if he had thought of the situation which has arisen.

If the donee was not intended to have the beneficial interest in the estate, and no other effective disposition has been made of it, it is held that the donor is entitled to it. Latrobe v. American Colonization Society, 134 Md. 406 , 106 A. 858 ; Springer v. Springer, 144 Md. 465 , 125 A. 162 . However, the evidence necessary to establish a resulting trust must be so clear, strong and unequivocal as to remove from the mind of the chancellor every reasonable doubt as to the existence of the trust. Semple v. Semple, 90 Fla. 7 , 105 So. 134, 136 . ⁵⁴¹ The donors in this case did not create a trust.

They stated that they were making a gift of the bonds, and then expressed the wish that the income, therefrom would be used for the payment of the ground rent. The vestry thanked the benefactors for “their munificent gift of $10,000 each for the extinguishment of the ground rent.” It was urged by counsel that the word “wish” sometimes has the effect of creating a trust. It is undoubtedly true that no technical words are required for the creation of a trust, provided that the language and the circumstances clearly show that such was the intention. Whether or not a trust has in fact been created in a particular case by the use of precatory words is, in the final analysis, a question of intention.

One of the fundamental rules of construction is that the intention of the donor must govern if consistent with the rules of law, and this intention must be gathered from the entire instrument. It is recognized that where a writing imports the granting of absolute ownership to the donee, and there are additional words expressing the donor’s wish as to the use of the property, no precatory trust has been created. Nunn v. O’Brien, 83 Md. 198 , 34 A. 244 ; Pratt v. Trustees of Sheppard & Enoch Pratt Hospital, 88 Md. 610, 622 , 42 A. 51, 54 ; Bennett v. Baltimore Humane Impartial Society, 91 Md. 10, 19 , 45 A. 888, 889 ; Sieling v Sieling, 151 Md. 536, 551 , 135 A. 376, 382 . It is also well established that a person cannot be both the trustees and the cestui que trust.

It is obvious that in order to create a trust the legal estate must be separated from the beneficial enjoyment, and therefore a trust cannot exist where the same person possesses both. Doan v. Parish of Ascension, 103 Md. 662 , 64 A. 314 , 7 L. R. A., N. S., 1119, 115 Am. St. Rep. 379 ; Charles T. Brandt, Inc. v. Young Women’s Christian Ass’n, 169 Md. 607 , 182 A. 452 . So it was held in Baltzell v.