Walbach v. Walbach

Boht>, O. J., delivered the opinion of the Court. This appeal is from an order refusing enforcement of an agreement made in compromise of pending litigation, and of the controversy out of which the litigation arose, and dismissing the petition for relief. The appellee, one of the parties against whom the relief is asked, resisted on the ground that he had signed the agreement, and compromised the controversy, under a mistake as to rights which had been previously secured to him, and which would by the terms of the agreement be disposed of. And the case involves consideration of the extent of a power of conveyance vested in trustees in a series of deeds creating the trust, conformity of a conveyance by those trustees and back to themselves on ¹⁰ changed terms of trust, a suit for cancellation and annulment and return to the first terms, a compromise agreement on new terms, a repudiation of the compromise by one of the parties in interest, and the petition now to be acted upon for enforcement of the compromise.

The parties to the original suit are two sisters and the son of one of them. This son resists the petition of his aunt for enforcement. It is stated in the petition that the original complainant in the suit, the mother of that son, has not, to the knowledge of the petitioner, made any attempt to repudiate the compromise; and she has not answered or otherwise entered into the controversy on the petition. The bill initiating the suit was filed by Mrs. Eleanor L. Walbach, widow, and mother of James deB.

Walbach, against her sister and against herself and her son as trustees; and it averred that the deceased mother of the sisters, during her lifetime, in 1909, had caused a number of ground rents previously owned by her to be transferred in trust to herself and her daughter, Mrs. Eleanor Walbach, as trustees, with a provision for payment of two-thirds of the income to the mother during her life and one-third to that daughter, a further provision for payment after the death of the mother of four-fifths to that daughter and one-fifth to' the other daughter, Miss Mary Walbach, and a still further provision for payment in remainder after the death of that daughter to any child or children of hers until the youngest should arrive at the-age of twenty-one years, upon which event four-fifths of the principal was to be 'delivered to- the children. Power was expressly, reserved to sell, convey and reinvest, and to' change investments.' Mrs. Eleanor Walbach is living, and has only the-one child,-the appellee, James deB. Walbach, born in about-1893; .and.he was therefore the remainderman entitled under the, deeds of 1909. . The unequal division. between the t-wo sisters, it was averted,. was made according to the expected needs of the two, it .being the expectation that the sister, Miss Mary Walbach, would be provided for by aunts with whom she lived, ¹¹ and who were especially attached to her, and each of whom had the same amount of principal that the mother of the two sisters possessed.

Later, in the year 1916, the attachment of the aunts for the one sister was interrupted, and because of a belief that she, Miss Mary Walbach, would not under the changed circumstances receive any provision from the aunts, her mother and her sister, as trustees, united in an effort to change the division of their income by conveyance to Leigh Bonsai, their attorney, and back to themselves as trustees, giving each daughter half or equal provision for support, after the mother’s death, and providing remainders in the halves to any children of the two, with an additional provision of a right in the daughter, Mary, to have rents to the value of $4,000 sold and the proceeds turned over to her in case of need. Power to appoint a trustee in the mother’s place was reserved. The mother died on July 14, 1930, and James deB. Walbach was, in October, 1930, appointed trustee.

That being the state of the record titles to the rents, the bill of complaint, filed a year after the mother’s death, on July 14th, 1931, sought annulment of the deeds of 1916, and return to the division of income under the original deeds of 1909, on the ground that the expectation that the daughter Mary would need the larger share had not been realized, because on the death of her aunts she had in fact received the provision originally expected from them, and with that provision added would, if the division of 1916 be still adhered to, receive not an income equal to her sister’s, but a total of $4,200 a year as compared with $1,600 retained by the sister. Miss Mary Walbach has not answered the bill. Live months after the institution of this suit, an agreement of compromise and settlement of it was signed by both the daughters and the son of Mrs. Eleanor Walbach, or James deB. Walbach, the present appellee; and it provided that, in place of the shares of income and principal specified in 1916, the sum payable in cash to Miss Mary Walbach should be reduced to $2,500, and only one-fourth of the total in ¹² come from the rents should be paid to her, and three-fourths should be paid to her sister Eleanor, with a right to ^one-half in Mary Walbach for the remainder of her life if she should survive- her sister.

It was also provided that Miss Mary Walbach should receive one-fourth of the net income of the trust estate arisen since debts of the mother had been paid. When, however, an effort was made to sell a rent to comply with the terms of the agreement by delivering the $2,500 in cash to Miss Mary Walbach, a question arose of the validity of the transfer or change of trust in 1916 as an exercise- by the trustees of the power originally reserved them under the 1909 deeds, and when a confirmatory deed was suggested, James deB. Walbach, the appellee, declined to execute it, and repudiated the compromise agreement, on the ground that he signed in ignorance of the contents of the 1909 deeds and of his rights as remainderman undér them, and upon a supposition that the deeds of 1916 were valid, and were the original sources of his rights. Thereupon Miss Mary Walbach filed in the suit instituted by Mrs. Eleanor Walbach, which appears to be still open on the docket, the petition for the enforcement of the agreement of settlement.

James deB. Walbach answered both as a trustee- and as a beneficiary, setting up his defense- previously stated and other objections to- the granting of the petition, but his mother, Mrs. Eleanor Walbach, as has been stated, did not answer and took no part in the controversy on the petition. The case stands before the court on the- unanswered bill, the petition, and the answer and testimony on behalf of James deB. Walbach; his aunt, the petitioner, offered no testimony.

The respondent’s testimony was to the effect that while, at the time of his mother’s signing the bill of complaint, and therefore before the time of the compromise agreement, he knew of the- existence of the deeds of 1909, and of the fact that a trust had been created under them, and while his counsel knew of that original trust, and knew its terms, when the compromise was made, he, the respondent, was not aware of the remainder secured to- him in those deeds, ¹³ and in the compromise agreement gave up by its terms rights he did not know he possessed. The testimony clearly defined the question in controversy in the suit by Mrs. Eleanor Walbach as one whether the division by the deeds of 1916 could he terminated or revoked, and the division of 1909 returned to, since the need intended to be met in thus departing from the original division had not actually come to pass; and a letter to- the complainant from Mr. Bonsai, attorney in the transactions, outlines the discussion preceding the compromise as concerned with these grounds for the exercise of judicial power to set aside the deeds of 1916. All testimony and all exhibits make it appear that, until objection to the contrary was raised on the attempt to make a sale of a ground rent under the compromise agreement, all parties had proceeded on the assumption that the transfer or change of 1916 was a valid exercise of power in the trustees under the deeds of 1909, binding the interests of Mrs. Walbach and her son, and giving Miss Walbach a right to an enlarged share of the rents, unless and until set aside on the ground of failure of the expectation of need in Miss Walbach, which, had caused the deeds of 1916 to- be made. Biit that the transfer or change of 1916 by the mother and the one daughter as trustees in that year was beyond-the limits of the power contained in the original deeds of 1909 admits of no doubt.

The power was “to sell and convey the property hereby conveyed or any reinvestment thereof, and to invest, and from time to time change the investment of any assets coming into their hands as trustees”; and, plainly, we think this does not include a power to alter the trust under which the property was held, especially.so. as to reduce, or otherwise vary the interest in remainder of James Walbach. The transaction of 1916 seems to- have been conceived, of as a change by the mother, the original source of the property, with the concurrence of the daughters as beneficiaries, but overlooking the existence of the remainder to; be. affected, and the necessity of concurrence of the owner, Huntt v. Townshend, 31 Md. 336, 338 ; In re Bauerns ¹⁴