Sweeney v. Hagerstown Trust Co.

Thomas, J., delivered the opinion of the Oonrt. By his last will and testament, which was admitted to' probate in 1890, James L. Hurley, the owner of an undivided one-half interest in a property on Washington Street, in Hagerstown, Maryland, known as the Lyceum Building, devised the same to a trustee upon the following trust: “said trustee to have the control and management of said property thus devised to him in trust and use the rents, interest or proceeds thereof in a judicious manner towards the support and maintenance of my said son, William J. Hurley, or pay the said rents, interest or proceeds over to the said William «I. Hurley as he may deem best for the welfare of my said son for and during the life of my said son, and afler his death the property thus devised in trust shall he equally divided among the children of my said son, legitimately begotten, and if he dies without any legitimate issue then said properly is to be equally divided between the brother and sisters of my said son, William J. Hurley.” The other undivided one-half interest in said property was purchased by the said William J. Hurley in 1906, and he and the trustee appointed by the court in the place of the trustee named in said will, on the 1st of October, 1919, exe ⁶¹⁴ cutecl a lease of a. part of said property, spoken of as the west storeroom, to Samuel M. Shafer for the term of five years, beginning on-the 1st of April, 1920, for the annual rental of $2,100, and on the 1st of January, 1921, the said William J. Hurley and the Hagerstown Trust Company, substituted trustee under -the will of James L. Hurley, executed a lease of the remaining part o»f said property to James Koliopulos, at the annual rental of $2,100, for the term of five years, beginning on April 1st, 1919, and ending on March 31st, 1924, “with the privilege re-rental.” The lease to Koliopulos was on the 31st of May, 1921, assigned by him to Charles M. Lnman, and on the same day the Hagerstown Trust Cbmpany, trustee, and William J. Hurley executed an agreement with Charles M. Lumm extending the term of said lease to March 31st, 1926. William J. Hurley died on April 25th, 1922, at the age of seventy-two years», witho»ut leaving a child or children, and some time thereafter the Circuit Cb'urt for Washington County, in a p»roceeding instituted therein, held that the undivided one-half interest of James L. Hurley in said property vested under his will in the brothel's and sisters of William J. Hurley, subject to be divested by the birth of a legitimate child of William J. Hurley, and in proceedings for a sale of the property for the purpose of partition, to which the lessees» were not made parties, the court appointed trustees to sell the property. Thereafter some of the parties interested in the proceeds of the sale to be made by the trustees appointed by the court filed the bill of complaint in this case against said trustees and the two lessees, in which, after setting oat the facts we have referred to, they allege that the substituted trustee under the will of James L. Hurley had no» authority to lease the p»roperty fo»r terms extending beyond tbe life of William J. Hurley; that said leases are therefore null and void, and that if the trustees appointed by the court were to sell the property subject to said leases it would result in great loss to tire parties interested.

The prayer of the bill is for an order of ⁶¹⁵ court directing the trustees to sell the property free of the leases, and for general relief. The lessees answered the bill, alleging that tbe lessors not only bad the power and authority to make said leases, and “to grant the extension of the Lumni lease, hut that it was the duty of the trustee to lease the property” for such reasonable terms as would be to tbe beet advantage of the parties interested; that owing to the location and character of the property it was not adapted to any hut business purposes, that a reasonable rental therefor could not have been obtained without renting it “for a reasonable term of years,” that the terms for which the properties wore rented were reasonable terms, and that by so renting the property a “much larger rental was obtained” than could have been obtained by renting them from year to year or for terms to expire at the death of William J. Hurley, that at the time the leases were executed it was' the custom, in Hagerstown to lease such properties for a, term of years; that, the properties, could not harp been rented for a, reasonable sum for a term less than fire years, and that at the time the leases were executed1 the probability was that they would not extend beyond the, lifetime of William J. Hurley. The answer of the lessees also denies that a sale of the property by the trustees subject to the leases will result in a loss to tbe parties, interested. Tbe answer of Richard H. Sweeney, one of tbe trustees appointed by the court to sell the property, who also appears, as, attorney for the plaintiffs in the bill, admits all tbe averments of the bill, while the answer of the Hagerstown Trust Company, the other trustee appointed by the court to sell the property, who was, also tbe substituted trustee under the will of James Tj,.

Hurley, admits all the facts alleged in the bill, except tbe averments that the leases are void, and that the sale of the property subject, to said leases, would result in a loss to the parties concerned, and alleges that the leasee were executed at the request of the life tenant, William J. Hurley, who, so> far as it knew, was at, that time in sound health; that it did not consider the terms of said leases unreasonable, but ⁶¹⁶ considered them to the advantage o£ the life tenant and the trust estate, and that they were within “the discretionary power of the trustee.” Counsel for the plaintiffs, and Samuel M. 'Shafer filed an agreement, “1. That, owing to the location and the character of the property leased to Samuel If. Shafer, mentioned in the bill of complaint, it was and is not adapted for any other purpose than a business property. “2. That it is and was at the time the said lease was entered into, the custom in Hagerstown, Maryland, to lease property similarly adapted for a term of -years. “3.

That the term of the said lease, to wit, five years, was a reasonable term, and the rent reserved in the said lease was a fair rental for the said property at the time the said lease was entered into. “4. That the said William J. Hurley died on April 25th, 1922, at the age of 72 years.” Counsel for thei plaintiffs and Charles M. Lunaon also filed an agreement a-s to the facts set out in the first, second and fourth paragraphs of the above agreement. Charles R. Grove, a witness for the plaintiffs, who said that he had been engaged in the real estate business in Hagerstown for eighteen or twenty years, and was acquainted with the rental values of property on West Washington Street, testified on cross-examination that the fair rental value of the property occupied by Mr. Lnmm under the lease in question was from $150' to $200' per month, 'and that the fair rental value of the property occupied by Mr. Shafer under his lease was about the same, that the property could not have been rented advantageously for a term less than five years, and that he did not think it would have been possible to rent property of that character under an agreement that the lease should terminate upon the death of any individual. Charles E. S'trole, a witness for the defendants, ⁶¹⁷ testified that he had been engaged in the real estate and insurance business in Hagerstown for nine years and was familiar with the values and rental values of properties on West Washington Street; that in his opinion the rental value of the property included in the Lumm lease was from $150' to $200 per month, and that the rental value of the property covered by the Shafer lease was “a little more,” that the terms of five years mentioned in said leases were reasonable terms for property of that character, that they could not have been rented to advantage for -a term, of one year, and that in his opinion it would not have been possible to obtain a satisfactory rent for the properties under a lease for a, term to end on the death of any person.

H. J. Stallings, who stated that he had been in the real estate and insurance business in Hagerstown for seven years,, and was familiar with the values of property on West Washington 'Street, testified that, five years was a reasonable term for a lease of a business property on West Washington Street., that the fair rental value of the property occupied by Mr. Lumm Was $175 per month; that in his opinion the property could not have been rented advantageously from year to year, and could not have been rented to a substantial party for a, term ending on the death of a person. Charles O. Easton, another witness who was engaged in the real estate and insurance business in Hagerstown, testified to the .same effect, and Samuel B. Loose, Esq., president of the Hagerstown Trust Company, testified that the Lumm lease was executed at the request of William J. Hurley. The defendants also offered in evidence a mortality table, which shows that the expectancy of life of a man seventy years of age is 8.48 years, and of a man seventy-one years of agfii is eight years. It thus appears from the admissions and agreements of the parties and the evidence in the case that the properties covered by the two leases in question were only adapted to business purposes; that it was the custom in Hagerstown to lease such properties for a term of years, that they could not ⁶¹⁸ have been rented, profitably for a year or from year to year, or for a term subject to be terminated by the death of William J. Hurley, that the term of five years was a reasonable and the customary one