Killen v. Houser

• Decision Date: 26 May 1965
• Docket Number: No. 314,314
• Citation: 239 Md. 79,210 A.2d 527
• Parties: Harold J. KILLEN v. Albert F. HOUSER.
• Court: Maryland Court of Appeals

Page 79

239 Md. 79

210 A.2d 527

Harold J. KILLEN v. Albert F. HOUSER.

No. 314.

Court of Appeals of Maryland.

May 26, 1965.

Ewing C. Whitaker, Langley Park, for appellant.

James R. Bucher, Upper Marlboro (Sasscer, Clagett & Powers, and Jerrold V. Powers, Upper Marlboro, on the brief), for appellee.

Before PRESCOTT, C. J., and HAMMOND, HORNEY, SYBERT and OPPENHEIMER, JJ.

OPPENHEIMER, Judge.

For the first time in the turbulent history of the George Washington Cemetery, ¹ the rights of the lot owners emerge into legal cognizance. Houser, the appellee, filed a bill of complaint in the Circuit Court for Prince George's County against Killen, the appellant, alleging they were both trustees of the Care Fund of the George Washington Cemetery, Inc. (the Cemetery Company) and that Killen had violated his trust in coverting a portion of the trust funds in the amount of $16,000 to his own personal use and in causing the unlawful investment of trust funds in an unsecured promissory note of one Abe Hoffman in the amount of $28,000. Killen demurred and answered, his demurer was overruled, testimony was taken, and Judge Bowen entered judgment against Killen for both the amounts claimed, with interest. In this appeal, Killen contends the trial court erred in overruling the demurrer; that evidence was improperly admitted at the trial; that the appellant's motion for a directed verdict at the close of the appellee's case should have been granted; and that the court committed other reversible errors in the trial.

I

The bill alleges that, in 1949, Killen became one of the two trustees of a Perpetual Care Fund, the principal of which was to be invested in securities which are legal investments for trustees in Maryland, and the income of which was to be paid to the Cemetery Company. Two specific violations of Killen's duty as trustee are alleged and the bill asks that Killen he required to restore to the trust such amounts as he cannot properly account for. Killen contends that the demurrer to the bill should have been sustained, because the alleged trust is too indefinite, because there is no certain group of beneficiaries, because the beneficiaries were not joined as parties, because Houser does not allege how he was appointed as trustee, and because his predecessor trustee was not joined as a party.

For the purposes of demurrer, all well pleaded facts alleged in the bill, together with the inferences properly drawn therefrom, are accepted as true. Kimmel v. W. T. Grant Co., 233 Md. 466, 197 A.2d 122 (1964); Brack v. Evans, 230 Md. 548, 187 A.2d 880 (1963); Realty Bldg. & Sav. Ass'n of Baltimore City v. Gorsuch, 180 Md. 185, 189, 23 A.2d 672 (1942). A bill of complaint, like other pleadings, should also Diffendall v. Diffendall, Md. 209 A.2d of which the court may take notice ex officio. Maryland Rules 301 b The amended bill alleges that the trust was of a Perpetual Care Fund, under a trust agreement, for the purpose of care and maintenance of portions of the cemetery. To constitute an express private trust, there must be a fiduciary relationship with respect to property, subjecting the person by whom title to the property is held to equitable duties to deal with the property for the benefit of another person or persons. The trust arises a result of a manifestation of an intention to create it; technical words are not required; it is enough if the intention to create a trust is apparent, and if the creator of the trust is competent to make it. Waesche v. Rizzuto, 224 Md. 573, 583, 168 A.2d 871 (1961) and authorities therein cited; Restatement, Second, Trusts 2d, § 2.

'Whether a trust has been perfectly created is largely a question of fact in each case, and the court, in determining the fact, will give effect to the situation and relation of the parties, the nature and situation of the property, and the purposes or objects which the settlor had in view.' Dougherty v. Dougherty, 175 Md. 441, 448, 2 A.2d 433, 436 (1938).

The bill alleges a fiduciary relationship arising out of a trust agreement. The parties to the agreement are not stated, but the law presumes that parties to a contract are legally competent to make it. Piraino v. Betka, 218 Md. 548, 147 A.2d 712 (1959); Bollack v. Bollack, 169 Md. 407, 410-411, 182 A. 317 (1935). The substance of the agreement, insofar as it is relevant, is set forth in the bill. The purpose of the alleged trust is clear--the care and maintenance of portions of the cemetery. If the trust is valid, it is immaterial, for the purposes of pleading, if it was created by the Cemetery Company or another legal entity. The agreement is an essential evidentiary part of the appellee's case, but not of his bill. The allegation that the appellee is a trustee under the agreement is sufficient; the manner of his appointment is a matter of evidence.

There is no express allegation in the bill as to who are the beneficiaries of the trust, but the peculiar legal position of the owners of cemetery lots is a recurrent theme in our decisions. ² In Abell v. Proprietors of Green Mount Cemetery 189 Md. 363, 367-368, 56 A.2d 24, 174 A.L.R. 971 (1947), we took judicial notice of some of the factual characteristics of cemetery lot ownership. The Maryland Legislature has taken cognizance of trusts for the perpetual care of cemetery lots in expressly providing that no grant or conveyance inter vivos or device or bequest for such purpose shall be held void as offending the rule against perpetuities. Code (1957), Article 93, §§ 345, 358. There is at least an inference that the term 'Perpetual Care Fund' when used, as it is in the bill before us, in connection with the care and maintenance of portions of a cemetery, means, prima facie, that the fund is to be held in trust for the care of cemetery lots which have been sold to individuals for the interment of their dead. See Gregory v. Chapman, 119 Md. 495, 508- 509, 87 A. 523 (1913), and Jackson, The Law of Cadavers, 332 (2d ed. 1950).

From this inference which we draw from the express allegations of the bill, it follows that the trust relates to the members of a definite class--the owners of the individual lots. A class of persons is sufficiently definite to be the beneficiaries of a trust if the identity of all the individuals comprising its membership is ascertainable. Restatement, Second, Trusts 2d, § 120, comment a. The owners of lots in a cemetery meet this test. See Brown v. Maplewood Cemetery Ass'n, 85 Minn. 498, 89 N.W. 872 (1902).

We do not agree with the appellant that the beneficiaries of the trust here involved are necessary parties to a suit brought against a co-trustee for malfeasance. Maryland Rule 205 b 1, which the appellant cites, relates to representation by a trustee of a beneficiary in a sale of trust property where the instrument gives the trustee the right to sell and to give receipts. In a suit such as this, the trustee is seeking to recover assets for the benefit of the trust and in such an action joinder of the beneficiaries on whose behalf the trustee is acting, is unnecessary. Stewart v. Firemen's Ins. Co., 53 Md. 564, 574 (1880).

Neither Cottman Co. v. Continental Trust Co., 169 Md. 595, 182 A. 551 (1936) nor Noel v. Noel, 173 Md. 152, 195 A. 315 (1937), cited by the appellant, involved a situation comparable to the allegations of the present bill. In Cottman, there was a question of the rights of the bondholders under a debenture agreement in respect of insurance money; it was held the bondholders were represented by the trustee and were not necessary parties to the suit. In Noel, it was held that, where there is a conflict of interest, the beneficiary, as well as the trustee, is a proper party. The general rule, here applicable, was stated as follows:

'Where a person sues or defends in equity in a fiduciary capacity, the necessity of making the beneficiary a party depends upon whether or not there may exist any conflict of interest. As a general rule the fiduciary represents the beneficiary in suits which relate to the fiducial relation and it is unnecessary for the beneficiary to be joined as plaintiff or defendant, if there is no conflict of interest between the fiduciary and the beneficiary, nor among the beneficiaries themselves. Miller's Equity [Proc.], §§ 44, 30; Van Bokkelen v. Tinges, 58 Md. 53; Stoll v. Smith, 129 Md. 164, 98 A. 530.' 173 Md. at 162-163, 195 A. at 320.

The appellee's predecessor trustee may have been a proper party to the suit, but he was not a necessary one. The bill alleges that the appellant personally appropriated part of the trust funds to his own use and caused another portion to be unlawfully invested. It does not appear from the bill that the predecessor trustee participated in either of these actions. There is a further allegation that the appellant has failed to account for the assets of the trust; no such charge is made as to the predecessor trustee. The appellant had the right to move that the predecessor trustee he made a party, Maryland Rule 282, but the bill is not defective for failure to join him. One trustee can maintain a suit against the other to compel him to perform his duties under the trust. Restatement, Second, Trusts 2d, § 200 comment e. ³ The demurrer to the amended bill was properly overruled.

II

At the hearing certain facts were uncontradicted. Killen became the owner of all the stock of a cemetery corporation known as Washington Memorial Park, Inc. (the Memorial Park) in 1947 or 1948 and actively participated in its management as an officer and director, with certain of his relatives, until February, 1957. At that time, he sold the stock of the Memorial Park to Houser and to one Mr. Harold I. Miller. In 1952 or '53, at a time when Killen owned all the stock of Memorial Park, Mr. (now Judge) Ralph G. Shure, the counsel for Memorial Park, formed the Cemetery Company as managing and selling agent for the Memorial Park. The Memorial Park owned the land.

On July 1, 1953...