Stein v. Safe Deposit & Trust Co.

Stockbridge, J., delivered the opinion of the Court. Michael S’tein, who had been the head of a banking firm in the City of Baltimore for a number of years, died on January 24th, 1903, leaving a last will and testament. His family consisted of his widow, Emma Stein, three daughters and one son. By his will, which bears internal evidence of ²⁰⁹ unusual care in its preparation, lie left, after two charitable bequests, certain carefully described property to his wife, and then the balance of his estate was directed to be treated as a residue, which was given to his wife Emma -Stein, his brother Simon Stein and Bernard Blimline, in trust, to collect the income, and after the payment of necessary expenses “to pay to my wife in each and every year during the term of her natural life, except as hereinafter limited,, one-third of the net income thereof, and to pay the balance or remainder of the net income share and shai’e alike to my children * * * and from and immediately after the death of my wife then the survivor or survivors of said trustees, in further trust, to assign, transfer and convey my estate or so much thereof as shall still be held in trust to the Safé Deposit and Trust Company of Baltimore.” By the next succeeding clause he gives, devises-.and bequeaths the estate so to be transferred to the Safe Deposit and Trust Company, in trust, to carry out certain trusts particularly set out.

Then follows the clause which has given rise to this litigation, and which is as follows: - - “8. Notwithstanding the trusts hereinbefore’ declared of and concerning my estate, I empower? Trustees, Emma Stein, Simon Stein and.:,Bernard Blimline, and the survivors or survivor of them,- or a ■ majority of them, to assign and convey, absolutely to my son when my son shall attain the. age, of. twenty-one years or at any time thereafter, two-fifths of my, estate, if in the judgment of said trustees the: survivors or survivor of them, or a majority of them it shall at any time appear to be for the benefit and ad-"’ vantage of my son to receive said two-fifths of my" estate absolutely, and also to convey and assign'absolutely to my son his share in the corpus of my estate as ascertained and determined by Item 7, Section B/ of this will in the event of any of my daughters dying ■ without leaving issue living at the time of her death, but in no event to convey and assign such share -until' after the death of my wife. ²¹⁰ “It is my will and intention by this provision to give said trustees full discretionary power to act so that the best interests of my son will be thereby secured, I desire expressly to state that I grant this power to said trustees to give my son a greater share of my estate than each of my daughters will receive not by reason of any preference I have for him, but inasmuch as I think he should receive sufficient capital to enter into business, if he proves himself capable and so desires. In the event that my estate shall have passed into the hands of the Safe Deposit and Trust Company and my son shall not have received his share of my estate absolutely under this provision of my will, then I desire the discretionary power herein granted to vest in the president of said company, and Simon Stein and Bernard Blimline, or the survivor of them, or should both be dead, in the president of said company alone.” The Simon Stein referred to, and appointed as trustee, died before the death of the testator, and by a codicil the testator appointed 'Simon H. Stein an executor and trustee in the place of Simon Stein, and conferred upon him the same powers, duties and obligations as were imposed by the will upon Simon Stein.

Prior to the completion of the administration Bernard 'Blimline was relieved by the Orphans’ Court from acting as executor, and when the estate came to be passed over from the executors to the trustees, Mr. Blimline renounced the trust and refused to act; the duties of the conduct of the trust were then performed by the two remaining trustees, Emma Stein and Simon H. Stein, until the death of the latter in September, 1913. Mrs. Stein continued to act as sole trustee from then until January, 1914, when she was relieved on her own application, by an order of Court. A little later, on April 25th, 1915, the Safe Deposit and Trust Company was appointed as trustee in her place and stead. On March 6th, 1915, the Safe Deposit and Trust Company filed a petition reciting the history of the estate, pray ²¹¹ ing the Court to assume jurisdiction of the administration of the trust, and construe certain clauses of the will.

From this petition it appears that Robert M. Stein, the son of Michael S'tein, had applied to the Trustee to have paid over to him the sum of $10,000, under what he claimed to be the provision of the clause of the will previously quoted. The $10,000 so .asked to be paid over was not the “two-fifths” of the estate of Michael Stein, but was in reality only about one-tenth of the two-fifths. The questions presented for consideration are two: Has the discretionary power given by the will now become vested in the president of the Safe Deposit and Trust Company, or does it remain in abeyance until the death of Mrs. Emma Stein; and second, Whether, if such power exists, it could be exercised only as to two-fifths of the estate, and not to any smaller portion thereof. Ry an order of the Circuit Court the case was referred to Mr. Coe as Master in Chancery for examination and report, and his report filed in September, 1915, is a most elaborate and carefully considered discussion of the case, in which he reaches the conclusions that the discretionary power is now vested in the president of the Safe Deposit and Trust Company of Baltimore, and that the said power can be exercised only as to the two-fifths of the trust estate, but not to any smaller portion thereof.

On this report a decree was passed which has been appealed from by the son, Robert M. Stein, in so far as it holds that the power can be exercised only as to two-fifths of the estate, and not to the smaller fractional part, which was asked for by him; and the daughters of Mr. Stein have appealed from that portion of the decree which holds the discretionary power to be now vested in the president of the Safe Deposit and Trust Company. An elaborate discussion of these questions seems hardly necessary. Upon the first question the rule laid down in Mill on Trustees, pp. 226, 227, is that: “Where one of two or more trustees disclaims, the remaining trastee or trustees ²¹² will take not only the entire legal estate, but also all tbe powers and authorities vested in the trustees as such, and which are requisite for the administration of the trust.” In the present case we find that of three named trustees, one has died, one never accepted the trust but refused to qualify for its execution, and the remaining one has by her own act been excused from further acting as such trustee It has already been pointed out that Mr. Stein in his will made provision for a transfer of the trust from the trustees first named to the Safe Deposit and Trust Company as a successor in the office of trustee. • It is true that no transfer appears from the record to have been made to the Safe Deposit and Trust Company in strict accordance with the terms of the will, but we have a case where the Court of Chancery has appointed as trustee the corporation which was named by the testator in his will as the body which he wished to succeed to the conduct of the trust after the individuals named. Therefore, much of what was said in Preston v. Safe Deposit and Trust Co., 116 Md. 211 , with regard to the exercise of a power of sale given by a will under an assumed grant of authority from a decree of Court, is applicable in this case, and there is presented a situation in which the language in Yates v. Yates, 255 Ill. 66 , is peculiarly applicable, when it says: “The creator of a trust has full power to provide for the appointment of a successor or successors in trust, in case the original trustee refuses to act, or dies, or is removed by a Court of competent jurisdiction. * * * If the substitution of a new trustee is provided for by the author of the trust, either by naming the person to be substituted, or giving the power of appointment to another, when the provision for succession is duly followed the substituted trustee takes under the will and derives the power to act from the act of the testator.

Upon the appointment being made under the power, the new trustee becomes vested ipso facto with the title to the trust premises and is clothed with the same power as if he had been originally named in the will.” ²¹³ The distinction between that case and the present lies only in the fact that the succession of the Safe Deposit and Trust Company to the trust created by the will of Michael Stein was not in strict accordance with the provisions of that will, the departure being that no conveyance appears to have been made as provided in the will, and the appointment which was made came, not after the death of Mrs. Stein, but upon her retiring from the execution of the trust, but both upon reason and authority it is difficult to see how that distinction can so affect the powers now possessed by the Safe Deposit and Trust Company as to render the execution of the trust impossible. In Sells v. Delgado, 186 Mass. 25 , it was held that a discretionary power to convey is not limited to the first