York v. Maryland Trust Co.

Walsh, J., delivered the opinion of the Court. This is an appeal from an order of the Orphans’ Court of Baltimore City overruling exceptions filed by the appellant ³⁵⁷ to the amount of commissions allowed, and the charging of certain interest items against income, in the administration account of the Maryland Trust Company, one of the appellees, as executor under the last will and testament of Roy U. York, deceased. At the time of his dPath in October, 1923, Mr. York owned approximately $1,700,000 worth of property, most of which consisted of large blocks of stock in various Standard Oil Companies, and he owed about $1,000,000 to Messrs. Jessop & Lamont of Kew York, and various other bankers, who held most of his stock as collateral security for his loans.

After qualifying as executor, the Maryland Trust Company sent Mr. Robertson Griswold, its trust officer, to Kew York and Cleveland to see about these loans and the securities pledged for them, and the record shows that he found that the bankers, at least in Kew York, had Mr. York’s stocks in envelopes marked with his name and that these stocks were not commingled with the general assets of the bankers. Mr. Griswold then arranged to have the stocks sold as and when he directed, and as a result of careful management and the judicious sale of the stocks, in comparatively small lots and at different times, the estate netted about $47,000 over and above the original appraisement. This original appraisement, which included the testator’s pledged securities listed at their market value, amounted to $1,688,223.73, and with the net profits of $47,137.84 made on the sales of part of the stocks, and the income and some other items received during the course of the administration, the total amount accounted for by the executor in the account under discussion was $1,804,825.16. The orphans’ court allowed the executor commissions on this entire amount, at the rate of six per cent, on the first $20,000 and two per cent, on the balance, so that the executor, after paying the State tax on commissions, received $33,126.85 in commissions.

The appellant, who is the widow of the testator and the life tenant under his will, objected to the payment of ³⁵⁸ these commissions, on the ground that the appraisement of the testator’s estate should not have included the full market value of the securities pledged for his debts, but should have been based on the value of the testator’s equity in these securities, which method of appraisement would have reduced the executor’s commissions about one-half. This precise question does not seem to have been passed upon in this state, and its determination is not without interest. In section é of article 93 of the Code, relating to administration accounts, it is said: “In such account shall be stated on one side the assets which have come to his hands according to the inventory * * *; and all moneys received for debts due the decedent shall be included in said account.” While in section 5 of article 93, it is provided that: “On the other side shall be stated the disbursements by him made, viz: * * * third, the debts of the deceased proved or passed, as herein directed, and paid or retained; * * *' fifth, his commissions which shall be at the discretion of the court not under two per cent, nor exceeding ten per cent, on the first twenty thousand dollars of the estate, and on the balance of the estate not more than two per cent.” Sections 228 and 229 of article 93 exempt certain clothing and food from being inventoried, and section 230 provides that: “With the exception of the articles enumerated in the two preceding sections, all the assets of the deceased shall be included in such inventory.” Section 231 provides that: “The following shall be deemed and taken for assets in the hands of an administrator, to wit: Leases for years, * * * and every species of personal property.” And section 223 provides for additional inventories in case any property or assets of any kind not mentioned in any inventory already made “shall come to the possession or knowledge of an administrator.” The foregoing seem to' constitute all the statutory provisions in this state which could materially affect the question before us. ³⁵⁹ Turning to the decisions of the Court, we find that our predecessors, in the case of Handy v. Collins, 60 Mel. 229, declined to allow an executor commissions on two bonds or jingle hills of a private individual. It appeared that the obligor on these bonds lived in Virginia, that the bonds had never been appraised or listed in the inventory, and that they were bequeathed specifically to the executrix, who was claiming commissions on their face value.

The law at that time (section 5 of article 93 of the Code of 1860) provided that commissions should be based on the inventory, and the Court, after pointing out that these bonds simply represented a private debt, and calling attention to the provisions of the law regarding the listing of debts apart from, the property included in the inventory, held that commissions could not properly be allowed on them, though it did say that bonds and stock in corporations “are properly appraised and go into the inventory.” Subsequently, by chapter 470 of the Acts of 1884 (now codified as section 5 of article 93), it was provided that commissions should he allowed on the estate instead of on the inventory, and the amount of commissions, within certain designated limits, was left to the discretion of the orphans’ court. This law was before the Court in the case of Hardt v. Birely, 72 Md. 134, 138 , and in construing it and deciding that certain private notes and bonds could be appraised and commissions allowed on the amount of the appraisement, the Court said: “Considering this section alone, independent of any decisions of this Court construing the law regulating the allowance of an executor’s commissions prior to'the Act of 1884, we do not think there can he any doubt a's to its meaning. The executor is to have commissions on the amount of the estate which comes into his hands in the course of administration and with which he is properly chargeable, and for which his bond is responsible. The amount of the notes on which commissions were allowed is a part, and a valuable part of the testator’s estate; hut it is clear that, if the executor is to have commissions on the notes they must be ³⁶⁰ valued or appraised.

For it would be unjust, in many cases, to allow commissions on the face value of notes and private securities. We can see no reason, however, why a value may not be ascertained for private securities in the same, or in some other more desirable manner as is now in use to fix the value of public securities, and the other items of the inventory.” The Court then distinguished that case from the case of Handy v. Collins, supra, chiefly on the ground that the law regulating the basis for fixing commissions had been changed; and also because in the Handy ease the debtor lived in Virginia, and the Court held that the executor in Maryland could not, by virtue of his letters here, have sued in Virginia, nor could his bond have been rendered liable for the Virginia debt; and, finally, because the executor in the Handy, case never acquired any control over any of the money due on the bonds. These two decisions and the statutory provisions heretofore quoted seem to furnish the only rules which have any material bearing on the question under discussion, and it is apparent that none of them are conclusive of that question. Some of the language used, in the opinions in the two cases just cited intimate that assets of a decedent located outside of Maryland should not be inventoried by a Maryland executor unless he secures possession of them, but this language was not necessary to the decision in either of those cases, and even if it had been the ground of the decision, it cannot be said that the executor in the present case did not acquire at least a qualified possession of the pledged stocks which are the subject of dispute.

It is conceded that the trust officer of the appellee went to Mew York and Cleveland, that in the former place, where by far the greater part of the securities were held, he was shown the stocks of Mr. York; that these stocks were then sold by the bankers who held them, not at their own discretion, but at the direction of the executor, that these sales were reported to the orphans’ court ³⁶¹ by the executor as having been made by it, and that after about $600,000 had been paid to Jessop and Lamont, the executor itself advanced about $120,000 for the payment of certain balances due these and other bankers, and took over and sold the stocks held as collateral for these balances. In addition to this, the record shows that Mr. York owned more than fifty thousand shares of stock distributed among thirty-nine different corporations, that he had varied interests in Baltimore, New York, Cleveland and Florida, that he owed large sums of money in various places, and that the liquidation of these obligations without serious loss and sacrifice required constant care and attention over a period of almost a year, that more than sixty claims of various sorts were made against the estate, the disposition of which involved a large amount of correspondence, that tax questions arose with various states as well as with Maryland and Baltimore City, and that the work of the executor also included the sale of a yacht in Florida, and the handling of a multitude of other details which would naturally arise in the working out of so large and intricate an estate. It also appears that, as a result of the careful management of the estate and the judicious sale of more than half the decedent’s securities, a net profit of more than forty-seven thousand dollars over and above the inventory figures was realized. And finally, the orphans’ court in its opinion says that “it is the long established practice of this court to approve and ratify inventories where the whole estate is returned regardless of the liens and claims against any or all of its assets and to fix commissions based on the inventory.” There is nothing in this practice at variance with our statutes, and in fact the provisions requiring the listing of all assets and of all debts would seem to indicate that this is the correct practice, at least so far as assets within the State of Maryland are concerned.

When it comes to foreign assets we find the general rule thus stated in 23 C. J. 1148: “An executor or administrator ³⁶² qualifying in the state of the domicil of the testator has title ultimately to the assets, wherever they may be situated, subject, however, to the satisfaction of local creditors and claimants, and ought to consider all the chattels of his decedent wheresoever situated as assets, if by reasonable diligence he may pursue and possess himself of them.” In the present case the executor did pursue the decedent’s foreign assets, secured the consent of the creditors who held them to dispose of them in accordance with the executor’s orders and directions, and by reason of its diligence, care and skill these assets netted the estate a profit in excess of $47,000. Under these circumstances, we think the orphans’ court properly allowed these assets to be inventoried at their market value. It may be that the executor could not have prosecuted a claim for these assets in the states in which they were located, but in this case there was no need to prosecute any claims. The creditors who held these assets recognized the executor in Maryland as the ultimate holder of them, and, without the granting of ancillary letters or other legal formalities, they agreed to sell them for the executor as and when directed by it.

These facts seem to us to dispose of the contention that the executor exercised no control over these assets, and to bring this case within the rule laid down in 23 O. J., supra, that an executor “ought to consider all the chattels of his decedent wheresoever situated as assets, if by reasonable diligence he may pursue and possess himself of them.” And if they are assets, then, under the provisions of section 230 of article 93 of the Code, they were properly inventoried. We express no opinion as to whether such securities should be deemed assets in a ease where the executor exercised no control over their disposition, and only received the net proceeds resulting from their sale by the foreign creditors who held them, nor are we to* be understood as passing on the question of whether the executor’s bond in this case would have been responsible for the negligent sale of the securities, or liable in the event of the failure of any of the bankers who ³⁶³ held them. Rone of those questions are before us and we are not undertaking to decide them. We simply hold that, under the facts and circumstances of this case, as disclosed by the record, the Orphans’ Court of Baltimore City committed no error in permitting these securities to be inventoried at their appraised value, and in allowing commissions on this amount.

It should be noted in this connection that our statutes vest a wide discretion in the orphans’ court, in fixing the amount of the commissions