Madden v. Mercantile-Safe Deposit & Trust Co.

• Decision Date: 12 June 1975
• Docket Number: MERCANTILE-SAFE,No. 803,803
• Citation: Madden v. Mercantile-Safe Deposit & Trust Co., 339 A.2d 340, 27 Md.App. 17 (Md. App. 1975)
• Parties: Peter H. MADDEN et al. v.DEPOSIT AND TRUST COMPANY, Trustee, et al.
• Court: Court of Special Appeals of Maryland

Page 17

27 Md.App. 17

339 A.2d 340

Peter H. MADDEN et al. v. MERCANTILE-SAFE DEPOSIT AND TRUST COMPANY, Trustee, et al.

No. 803.

Court of Special Appeals of Maryland.

June 12, 1975.

Peter H. Madden, in pro. per.

Clarke Murphy, Jr., and Peter Parker, Baltimore, for other appellants.

H. Vernon Eney and J. Cookman Boyd, Jr., Baltimore, with whom were Lee M. Miller, Judith A. Armold, Nell B. Strachan and Venable, Baetjer & Howard, Baltimore, on the brief for appellee Mercantile-Safe Deposit and Trust Co.

Rignal W. Baldwin, Thomas J. S. Waxter, Jr., and A. MacDonough Plant, Baltimore, with whom were Semmes, Bowen & Semmes, Baltimore, on the brief for other appellees.

Argued before MORTON, POWERS and GILBERT, JJ.

POWERS, Judge.

This case involves the Pimlico Race Track and the law of trusts. A prologue to the litigation now before us could, in the right hands, make a thoroughly enchanting historical novel. The present case, and other litigation which arose as the Hammond Trust approached or arrived at its termination, could furnish the material for a fascinating documentary.

Because it is beyond our competence to achieve either of those results, as well as inappropriate that we attempt to do so, we shall relate, in unembellished form, only so much of the history and of the facts involved as are material and necessary to an understanding of the legal questions we must decide.

Background for the Present Case

William R. Hammond became the owner, in 1905, of some 78 acres of land, with improvements, known as Pimlico Race Track, then located in Baltimore County but which, by later annexation, became a part of the City of Baltimore. The entire property was leased to The Maryland Jockey Club of Baltimore City, which conducted horse racing there. Mr. Hammond, then a widower, died in 1909. His will left the Pimlico property and other assets to Safe Deposit and Trust Company of Baltimore, now Mercantile-Safe Deposit and Trust Company, ¹ in trust, and provided, with minor exceptions not now material, that the income be paid to his only child, a daughter, Audrey F. Hammond, for her life. The daughter later became Mrs. Audrey Hammond Madden. In his will the testator gave his daughter a power of appointment, and provided that if she did not exercise the power, the principal of the trust would, at her death, go to the persons who would be entitled to it as if he had died intestate.

Through successive leases negotiated between them from time to time, the Pimlico property held by Mercantile, enlarged by the later acquisition of certain contiguous parcels, was continuously leased to the Jockey Club, until August 1947. Under an agreement of sale dated 30 April 1947, the Trustee sold the Pimlico property which it held to the Jockey Club for $1,115,000. Settlement of that sale in August 1947 terminated the lease which, by its terms, would have ended in 1949.

Mrs. Madden, in 1943, irrevocably released the power of appointment she had under her father's will. The legal effect of that release was determined by the Court of Appeals in Madden v. Mercantile-Safe Deposit and Trust Co., 262 Md. 406, 278 A.2d 55 (1971). Her release of the power of appointment, thus rendering impossible a divestiture of the remainder, which she could have accomplished by an exercise of the power, did not, as she contended, merge the remainder with her life estate, on the ground that she was the sole person who would have been entitled to take if Mr. Hammond had died intestate. On the contrary, said the Court of Appeals, the class of persons entitled to the remainder was to be determined at the time of Mrs. Madden's death, and would be those persons who then would have been entitled, according to the law in effect in 1909, to take Mr. Hammond's estate had he died intestate.

To continue this narrative, we quote from the opinion in Madden v. Cosden, 271 Md. 118, at 119-20, 314 A.2d 128, at 129 (1974), an earlier appeal from an order entered in the present case, where the Court of Appeals said:

'Mrs. Madden died on 4 January 1972, survived by three daughters, Audrey Cosden, Anne M. Hallenbeck, and Jane M. Humphreys, each of whom have descendents, and by three grandchildren, Peter H. Madden, Michael J. Madden and Christina Little Madden, the children of Mrs. Madden's only son, James H. Madden, who had died in 1953.

'Immediately following Mrs. Madden's death, Mercantile-Safe Deposit and Trust Company (the Mercantile), trustee of the trust estate created by Mr. Hammond's will, caused to be prepared a schedule of the assets then comprising the trust, which had a value of some $3,000,000.00, and of a proposed distribution, under which Mrs. Cosden, Mrs. Hallenbeck and Mrs. Humphreys, daughters of Mrs. Madden and granddaughters of Mr. Hammond, would each receive one-fourth of the trust assets, and Peter H. Madden, Michael J. Madden and Christina Little Madden, grandchildren of Mrs. Madden and great-grandchildren of Mr. Hammond, would each receive one-twelfth of the trust assets, since they shared equally the one-fourth share which would have passed to their father, if living.

'When it became apparent that all of the children of James H. Madden were not willing to acquiesce in the proposed distribution, the Mercantile in June, 1972, filed in the Circuit Court of Baltimore City a bill of complaint which recited the circumstances; asked that the court assume jurisdiction of the trust, and determine the proper distribution of the trust estate.

'All of the parties defendant answered. Mrs. Cosden, Mrs. Hallenbeck and Mrs. Humphreys accepted the proposed distribution. Michael J. Madden and Christina Madden submitted to the jurisdiction of the court. Peter H. Madden later filed an amended answer and cross-claim in which he asserted, inter alia, that he was entitled to one-sixth of the trust assets, on the theory that the trust estate was equally distributable between Mrs. Cosden, on the one hand, and the three children of James H. Madden, on the other.

'The filing of the answer and cross-claim spawned a flurry of pleading, pretrial discovery and depositions, little of which is pertinent here. Ultimately, the issue raised by Peter H. Madden's cross-claim as regards the distribution of the corpus of the trust came on for separate trial. From a decree ordering distribution in the manner proposed by the Mercantile, Madden appealed.'

The issue presented and decided in Madden v. Cosden, supra, was the validity of Mrs. Madden's second marriage, following a Nevada divorce, and whether Mrs. Hallenbeck and Mrs. Humphreys, children of that second marriage, were entitled, as lawful heirs and next of kin of Mr. Hammond, to share in the distribution. The Court of Appeals held that they were.

The Present Case in the Circuit Court

Mercantile's bill of complaint to determine the proper distribution of the trust was filed in the Circuit Court of Baltimore City on 23 June 1972. Combined answers, cross-claims, and counterclaims filed by Peter H. Madden on 21 August and 23 August were later stricken, apparently for reasons of form, and on 26 December 1972, with leave of court, he filed an amended counterclaim, naming as counter-defendants Mercantile, in its trust capacity and in its individual capacity, and, as an added party, the Jockey Club. Leave to bring in the Jockey Club as a counter-defendant was later granted. At the same time he filed his answer to Mercantile's complaint Peter H. Madden filed the cross-claim against his codefendants which raised the issue decided in Madden v. Cosden, supra.

On 10 April 1973, with leave of court, Peter H. Madden filed a second amended counterclaim, in which Audrey Cosden joined. On 17 May 1973, with leave of court, a third amended counterclaim, in which Michael Madden and Christina Madden also joined as counter-complainants, was filed.

The counterclaim alleged that in selling the Pimlico Race Track to the Jockey Club in 1947, Mercantile had breached its fiduciary duty in numerous ways, resulting in the disposition of a trust asset for an inadequate price. It sought to surcharge Mercantile for the difference between the sale price and the actual value, or, in the alternative, to rescind the sale.

Trial on the merits of the issues raised by the third amended counterclaim and the pleadings responsive to it was held before Judge David Ross beginning 4 June 1973. Evidence on behalf of the counter-complainants was concluded on 21 June 1973. Several motions then made or pending were argued. On 27 June 1973 Judge Ross rendered an oral opinion ruling on several motions, and reserving his ruling on one of the motions until after receipt of requested memoranda from counsel. The all-important ruling made at that time was the granting of motions of the counter-defendants to dismiss the third amended counterclaim on the ground that the evidence was not legally sufficient to entitle the counter-complainants to recover.

Other rulings had been made from time to time on interlocutory matters before the trial on the merits. Other questions arose and were ruled upon during the post trial period. A final decree was signed by Judge Ross and filed on 23 May 1974. An order for appeal filed timely thereafter by Peter H. Madden, separately, noted his appeal from an order entered on 13 February 1973, from an order of satisfaction between the four counter-complainants and the Jockey Club, approved by the court and filed on 29 October 1973, and from the final decree of 23 May 1974. An order for appeal on behalf of Audrey Cosden, Michael Madden, and Christina Madden noted their appeal from the order entered on 13 February 1973 ² and from the final decree of 23 May 1974.

The Issues in this Appeal

In this Court the appeals were separately briefed and argued by appellant Peter H. Madden on the one hand, and on behalf of appellants Audrey Cosden, Michael Madden, and Christina Madden, on the other hand. Questions presented by Peter H. Madden in his brief are...