Johnson v. Johnson

• Decision Date: 13 May 1935
• Docket Number: 55.
• Citation: 179 A. 831,168 Md. 568
• Parties: JOHNSON ET AL. v. JOHNSON ET AL.
• Court: Maryland Court of Appeals

179 A. 831

168 Md. 568

JOHNSON ET AL. v. JOHNSON ET AL.

No. 55.

Court of Appeals of Maryland

May 13, 1935

Appeal from Circuit Court, Harford County; Walter W. Preston, Judge.

Petition by Edwin H. Webster, 2d, administrator of J. Edwin Webster as trustee under the will of James T. Johnson, deceased against Savannah Johnson, Augusta R. Johnson, and others. From a decree approving nunc pro tunc certain investments made by the deceased trustee, defendants Savannah Johnson and others appeal.

Affirmed.

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

Robert H. Archer and Morris Rosenberg, both of Baltimore (Tydings Walsh, Levy & Archer and Herbert Levy, all of Baltimore, on the brief), for appellants.

Lawrence Perin and William D. Macmillan, both of Baltimore (Edwin H. W. Harlan, of Bel Air, and Semmes, Bowen & Semmes, of Baltimore, on the brief), for appellees.

SHEHAN Justice.

This is an appeal from a decree of the circuit court for Harford county dated November 2, 1934, wherein certain investments that had long been made by a trustee were ratified and confirmed in a nunc pro tunc order. Savannah H. Johnson in her own right and as administratrix of William Merryman Johnson; Maurice S. Harkins, administrator of Corinne Harkins, deceased; James M. Johnson and Nora Harkins are appellants herein, and were defendants in the bill of complaint; and Augusta R. Johnson and William H. Michael, executors under the will of James M. Johnson, are appellees and were complainants in the bill.

On April 27, 1925, the last will of James T. Johnson, deceased, dated August 20, 1912, was duly admitted to probate in the Orphans' Court for Harford county. Under the third item or clause of this will, James T. Johnson, after making some minor dispositions of property, made the following bequest: "Third--Within twelve months after my death, all my property both personal and real, is to be sold by my Executrix and Executor hereinafter named; and the proceeds from such sale I give and devise to my wife, Augusta Rosena Johnson, during her natural life. After the death of my said wife, I give and devise to my daughter-in-law, Savannah Johnson, wife of Merryman Johnson, one thousand dollars; to my son, Merryman, five hundred dollars; to my daughter, Corinne, five hundred dollars; to my grandson, James Johnson, five hundred dollars; and the residue is to be equally divided between my two grandchildren James Johnson and Nora Harkins."

Augusta Rosena Johnson and William H. Michael were named as executrix and executor of the will. They entered upon the duties of their office, and apparently due administration of the estate was effected, and there was a balance in the hands of said executrix and executor of $5,250.23, which was held by them subject to the provisions of the third item of said will. Upon a proceeding instituted in the circuit court for Harford county in equity, jurisdiction was assumed by the court of the aforesaid sum of money in the hands of said executor and executrix under the said will, and J. E. Webster was appointed trustee to take charge of said funds and invest the same under direction and order of court. This decree was dated July 7, 1926. The said trustee died on or about April 19, 1928. His trusteeship therefore covered the period from July 7, 1926, to April 19, 1928.

Upon a petition filed in said court, J. Edwin Webster, 2d, was, on July 2, 1928, appointed trustee to administer the trust. During his said trusteeship, J. Edwin Webster invested practically the entire trust estate in 6 per cent. bonds of the United Railway & Electric Company, without previous order or authority from the court. After his appointment as trustee, and on October 20, 1932, Edwin H. Webster, 2d, administrator of J. Edwin Webster, trustee, filed a petition and report in the said court setting forth the appointment of J. Edwin Webster, trustee, and the fact that he had departed this life, as above stated, and that the books and accounts showed that J. Edwin Webster, deceased, had received the sum of $5,260.23 and $99.28 accrued interest thereon, and that with the exception of $380.23 of the principal and $51.95 accrued interest this sum of money had been invested in bonds of the United Railway & Electric Company. There are other details in said report concerning the collection and payment of interest etc., which need not (in detail) be considered.

The petitioner then prayed:

First, that the investments of the trust funds so made by his decedent be approved and ratified by the court as of the dates of the investments.

Second, that the papers be referred to the auditor to state an account showing the true condition of the trust at the date of the decedent's death, etc., and for further relief.

Upon this petition there was a show cause order, and on October 20, 1932, the defendants answered admitting the formal parts of the bill, averring that they had no knowledge of the investments set forth in the petition, and objecting to the ratification of the investments because there was a failure to have the circuit court for Harford county sanction and ratify the said investments, thereby depriving the trust estate of the protection of the court; and for the further reason that there was a failure to comply with equity rule No. 35 of the circuit court for Harford county, and the defendants alleged and averred that this resulted in a depreciation of the trust estate and caused the loss complained of.

There was an agreed statement of facts. Testimony was taken in the case, and after a hearing of all the parties a decree was passed on November 2, 1934, in which the investments were approved and ratified nunc pro tunc as of the date or dates said investments were made, and the papers in the case were referred to the auditor to state an account giving to the said trustee allowances for his investments, collections, and expenses, and the objections filed by the defendants to the ratification of the investments were dismissed. From that decree this appeal is taken.

In addition to this there is a stipulation by counsel filed in the case and presented to this court that although no order of the circuit court for Harford county was actually passed disallowing the exceptions filed by the appellants to the auditor's account, as set forth on page 20 of the record, it shall be considered that such an order was passed disallowing the appellants' exceptions, and that this appeal is to be deemed to be taken from such order, as well as from the order of November 2, 1934. And it was further stipulated and agreed that other than those grounds or objections raised in the appeal and set forth in the appellants' answer there are no grounds for objection to the ratification of said account, as set forth in the record on pages 20 and 21, and it was further stipulated that the opinion rendered by the chancellor, a copy of which is attached, may be used by the parties in this case to the same extent as if it had been incorporated in the record.

In the testimony taken in this case, it is clearly and definitely shown that these investments at the time they were made were such as would have been ratified if application had been made to the court having jurisdiction of the trust; and it is also conclusively shown that the trustee acted in good faith and with integrity in making these investments. The matter was taken up by letter with the person entitled to the beneficial life interest before and after the purchase of the securities, and with her brother, who approved the suggested investment. The investments were discussed with one of the judges of the court having jurisdiction. Other like investments had been approved by the court, both before and after these investments. Judge Harlan testified that if authorization had been requested before the investments were made he would have authorized them. It was shown that these bonds were listed by the Supreme Bench of Baltimore City as being proper investments for trust funds. With evidence of this character before the chancellor, undenied and unquestioned, the decree of November 2, 1934, was passed and the appeal therefrom was entered.

In view of the petition and answer, and of the stipulations with respect thereto, filed in this case, it seems that the only question to be considered is whether or not the chancellor had a right in law and equity to pass the nunc pro tunc order from which this appeal is taken, and in that connection there is the further question: Did the failure of the trustee to secure an order of court approving the investments referred to, as provided by Equity Rule No. 35 of the circuit court for Harford county, and by the order of his appointment, render the trustee liable for loss in connection with the investments where it is conclusively shown that the trustee, while not complying with the rule, exercised care and diligence, and acted in good faith and made his investment in securities that would have been authorized by the court, had application been made to it at or before the time of the investment? This seems to be the sole question presented in this record.

The will of James T. Johnson did not name a trustee, and in order to carry out the provisions of this will J. Edwin Webster was appointed trustee "to take charge of said funds and invest the same under the direction and order of this court." It is contended by the appellant that this part of the decree, as well as the equity rule with regard to investments, were both violated in making these investments without first having the authorization or sanction of the court in so doing, even though the investments as made were of the character and under the conditions above referred to. The appellants further contend...