Fidelity & Deposit Co. of Maryland v. State

• Decision Date: 01 March 1933
• Docket Number: 106,107.
• Citation: Fidelity & Deposit Co. of Maryland v. State, 165 A. 176, 164 Md. 304 (Md. 1933)
• Parties: FIDELITY & DEPOSIT CO. OF MARYLAND v. STATE, TO USE OF GROH. STATE, TO USE OF GROH, v. FIDELITY & DEPOSIT CO. OF MARYLAND.
• Court: Maryland Court of Appeals

165 A. 176

164 Md. 304

FIDELITY & DEPOSIT CO. OF MARYLAND v. STATE, TO USE OF GROH.

STATE, TO USE OF GROH, v. FIDELITY & DEPOSIT CO. OF MARYLAND.

Nos. 106, 107.

Court of Appeals of Maryland

March 1, 1933

Appeals from Circuit Court, Washington County; Frank G. Wagaman Judge.

Suit by the State of Maryland, to the use of Garland E. Groh trustee, against the Fidelity & Deposit Company of Maryland. From the decree, both parties appeal.

Affirmed.

Argued before BOND, C.J., and URNER, OFFUTT, DIGGES, PARKE, and SLOAN, JJ.

Alexander Armstrong and John Henry Lewin, both of Baltimore (Armstrong Machen & Allen, of Baltimore, on the brief), for Fidelity & Deposit Co. of Maryland.

Harvey R. Spessard, of Smithsburg, for Groh.

SLOAN Judge.

Nancy Lechler died August 1, 1890, leaving a will probated in the orphans' court of Washington county August 8, 1890, whereby she disposed of her estate as follows:

"I give and devise unto Louisa M. Bell, formerly Louisa M. Funk, all the income arising from my property, real, personal and mixed, during her natural life at the death of said Louisa M. Bell, formerly Louisa M. Funk all the principal arising from the sale of all my property real, personal and mixed shall be divided as follows:

To the child or children of said Louisa M. Bell formerly Louisa M. Funk which may be hereafter born to her each shall receive a share equally with the brothers and sisters of said Louisa M. Bell, formerly Louisa M. Funk, namely, John E. Funk, Nannie Funk, Susie Funk, Effie Funk, Dora Funk and Mrs. Alice Rowe wife of John Rowe of Waynesboro, Pa., and the share which would in this manner fall to Mrs. Alice Rowe shall be equally divided among her children, share and share alike."

The niece, Louisa M. Bell, née, Funk, was appointed executrix without bond but with no power of sale. There is no evidence that she ever qualified. May 5, 1911, Louisa Funk, who had, in the meantime, been divorced and resumed her maiden name, was adjudged a lunatic and the inquisition confirmed by the circuit court for Carroll county, and Albert J. Long of Washington county was appointed committee and trustee to take charge of and manage her property under the direction of that court.

On September 16, 1911, by Albert J. Long, their solicitor, he, as committee and trustee of Louisa M. Funk and all of the adults who would be entitled to take the proceeds of the estate of Nancy Lechler, upon the death of Louisa M. Funk, filed a bill against those entitled, who were then minors, to wit, Charles Rowe and Guy Rowe, sons of Mary Alice Rowe, and Earl Funk, son of John E. Funk, deceased, and against Louisa M. Funk, lunatic, and Mary A. Rowe, administratrix c. t. a. of Nancy Lechler, deceased, by which it was alleged that Nancy Lechler died seized of five parcels of land in Washington county, two of which were improved by dwelling houses; that the properties were not producing as they should; and "that it would be to the advantage of all the parties concerned and having interest in said properties if said real estate was sold and the proceeds invested so as to inure to the benefit of the said Louisa M. Funk during her natural life and at her death to be divided among the parties entitled thereto." The prayers for relief were: "(1) That this Honorable Court may take jurisdiction in the premises. (2) That the said real estate mentioned and described in the bill of complaint may be sold and the proceeds invested so as to inure to the benefit of Louisa M. Funk during her natural life and at her death to be divided amongst the parties entitled thereto." (3) Further relief.

A decree for the sale of the property mentioned was passed and Albert J. Long was appointed trustee. The decree required the trustee to bring into court "the money arising on such sale and the bonds or notes which may be taken for the same, to be disposed of under the direction" of the court. As required by the decree, the trustee, so appointed, gave bond with the Fidelity & Deposit Company of Maryland, appellant in No. 106, in the sum of $4,500, conditioned for the faithful performance of "the trust reposed in him by said decree, or that may be reposed in him by any future decree or order in the premises." The appellant argues that the forms of the decree and bond are the same as those common in proceedings for the partition and sale of real estate belonging to tenants in common, and therefore the duties of the trustee would end with the sale, audit, and distribution of proceeds. This is true, but it failed to show any reason why such forms of decree and bond would not be as effectual and binding on a continuing trust such as was alleged in the bill under which the sale was decreed, and under a statute which required the court to direct the investment of the proceeds. The trustee made the sales, which were reported to the court, for the sum of $4,840, and on January 31, 1912, they were ratified. On August 12, 1912, the trustee filed a supplemental report to the effect that the entire purchase money had been paid. An auditor's report was filed November 19, 1912, by which, after deducting the costs and expenses of the suit and sale, there was distributed "to Albert J. Long, Trustee for use and benefit of Louisa M. Funk in accordance with Last Will and Testament of Nancy Lechler, deceased, $4,496.57," and the report ratified December 6, 1912. All of these proceedings appear in No. 7357 Equity in the circuit court for Washington county, and no other order was passed in that cause until March 19; 1932, when a petition was filed for the appointment of a new trustee to succeed Albert J. Long, who died April 1, 1923, upon which Garland E. Groh, the equitable plaintiff in the instant case, was so appointed.

March 27, 1913, Albert J. Long, as "committee of the person and estate of Louisa M. Funk, lunatic," filed a petition in No. 7597 Equity in the circuit court for Washington county, wherein he alleged that he had in hand the sum of $4,496.57, out of the proceeds of sale made in No. 7357 Equity, distributed to him by the auditor's report in said case as "trustee for the use and benefit of the said Louisa M. Funk," and that as such committee he was "entitled to receive the income from said sum of money," and prayed an order "assuming jurisdiction of said trust fund and estate, appointing a trustee to take charge of said trust fund and estate, fixing the bond of said trustee and the compensation" of such trustee. The court thereupon passed an order wherein it said: "The said court hereby assumes jurisdiction of the trust fund and estate created by the last will and testament of Nancy Lechler, late of Washington county, Maryland, deceased, being also the same fund in the hands of Albert J. Long, trustee in Equity Cause No. 7357," and fixed the amount of the bond. Long then qualified by filing a bond in the penalty of $9,000, with his wife, Sue E. Long, and Andrew K. Coffman as sureties. The only other thing done in No. 7597 Equity during Long's lifetime was the statement of an auditor's account filed March 21, 1916, ratified March 15, 1917, which accounted for the corpus, $4,496.57, and interest on same from March 26, 1913, to March 26, 1916, $539.59 (being the interest paid by the People's National Bank on the deposit), and the distribution to "Louisa M. Funk March 20, 1916, as per voucher filed, $492.11," the voucher filed being a receipt for the sum so distributed from Albert J. Long, committee, to himself as trustee. The record shows that the county commissioners of Washington county paid for the maintenance of Louisa M. Funk at the State Hospital and were never repaid anything by Long or any one else. None of the parties to No. 7357 Equity were parties to No. 7597 Equity except Albert J. Long. It was an ex parte proceeding, brought without notice to any interested party, and the probabilities are that they never knew anything about it until they began to seek the whereabouts of their money.

On November 16, 1929, three of those entitled to distribution of the proceeds of sale of Nancy Lechler's real estate filed a petition in No. 7597 Equity wherein, amongst other things, it was stated that Albert J. Long had died April 1, 1923, and Louisa M. Funk, June 25, 1928, and prayed the appointment of a trustee to take charge of the trust fund of which the court had assumed jurisdiction by its order of March 26, 1913, and Garland E. Groh was so appointed and qualified. Shortly thereafter the new trustee reported that inquiry at the Nicodemus National Bank (formerly People's) had disclosed that "the only money on deposit there in the name of Albert J. Long, trustee in No. 7597 Equity, was the sum of $78.29; the sum of $2,450 having been withdrawn on April 14, 1916, and the sum of $2,000 having been withdrawn on May 3, 1916," and that he was unable to locate any security for the money so withdrawn or to ascertain what disposition had been made of it. The new trustee then prayed the court for leave to enter suit on the bond in No. 7597. The chancellor held the whole proceeding in No. 7597 Equity to be a nullity so far as it attempted to make the surety in the case responsible for the proceeds of the sales made in No. 7357 Equity and dismissed the bill on the ground that the funds never got out of No. 7357 Equity. No appeal was taken from the decree, and while it is not before this court for decision, it is necessary to discuss it, as the liability of the bond in No. 7357 Equity depends on the effect of the proceedings in No. 7597 Equity.

The devisees under Nancy Lechler's will having failed to establish liability against the surety in No. 7597 Equity one of them filed a petition on March 19, 1932, praying the appointment of a new trustee in No. 7357 Equity to succeed Albert J....