Manders v. Mercantile Trust & Deposit Co.

• Decision Date: 26 February 1925
• Docket Number: 86.
• Citation: 128 A. 145,147 Md. 448
• Parties: MANDERS ET AL. v. MERCANTILE TRUST & DEPOSIT CO.
• Court: Maryland Court of Appeals

128 A. 145

147 Md. 448

MANDERS ET AL. v. MERCANTILE TRUST & DEPOSIT CO.

No. 86.

Court of Appeals of Maryland

February 26, 1925

Appeal from Circuit Court No. 2 of Baltimore City; Duke Bond, Judge.

Suit by Margaret E. Manders and others against the Mercantile Trust & Deposit Company, executor and trustee of the will of Samuel M. Robinson, deceased. From a decree for defendant complainants appeal. Reversed and remanded.

Bond C.J., dissenting in part.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, PARKE, and WALSH, JJ.

Watson E. Sherwood and Edward Duffy, both of Baltimore, for appellants.

Charles McH. Howard, of Baltimore, for appellee.

WALSH J.

The bill of complaint in this case asked the court to terminate the trust created by item 4 of the last will and testament of Samuel M. Robinson, deceased, and to direct the trustee to turn over the trust fund to the complainants, who were respectively the widow, mother, and two sisters of the testator.

The following disposition of his estate was made by the testator in his will: By item 2 he gave to his wife, Margaret E Robinson (now Margaret E. Manders), $5,000, and to his mother, Susan Rebecca Robinson, and his two sisters, Pearl and Thelma Robinson, each the sum of $10,000. Item 3 was a specific bequest of securities sufficient to yield $420 a year over and above expenses, as a spendthrift trust, for his brother Royston Robinson for life, and after his death the principal was to become a part of the residue of the testator's estate, and was to pass under the residuary clause of his will. Item 4 bequeathed the sum of $20,000 to the Mercantile Trust & Deposit Company of Baltimore, "in trust to hold the same and pay out of the net income arising therefrom to my wife, Margaret E. Robinson, the sum of nine hundred dollars, in monthly installments, accounting from the date of my death, for and during the term of her natural life. It is my intention that my said wife shall be paid out of said fund the said sum of nine hundred dollars per annum, and if the income arising therefrom is not sufficient to yield that amount for payment to her, after deducting the expenses of administering the trust, then I authorize and direct the trustee to pay to her any deficiency out of the corpus of the trust fund, and to continue to so do until the exhaustion of the principal of the fund." It was then provided that any surplus income be added to the principal, and that, in the event his wife predeceased him, the $20,000 be given to his mother and two sisters in equal shares, or to the survivors or survivor of them. There was no remainder over. With the exception of the testator's "packing business," item 5 bequeathed and devised "all of the rest, residue, and remainder" of his estate to his wife, mother, and two sisters, the wife to receive twenty-five fifty-fifths and the mother and two sisters each to receive ten fifty-fifths. Items 6 and 7 provide for any children the testator might have; but these items are of no concern in this case, because he had no children. Item 8 disposed of the "packing business" above mentioned, and provided that the proceeds of the sale of the business, and the profits made pending the sale, should be divided, one half to the testator's brother Herbert, and the other half to his wife, mother, and two sisters in the proportions fixed by item 5.

The estate proved insufficient to pay in full all the bequests made in the will, and an agreement was accordingly entered into on July 31, 1919, by all the beneficiaries under the will, whereby the testator's widow, in consideration of her not renouncing the will and taking her legal share of the estate, was given a preference, both as to the $5,000 bequeathed to her in item 2 and the $20,000 trust fund created for her benefit in item 4. The distribution made under this agreement resulted in the payment in full of the last-mentioned two items for the widow, and the payment in full of a sum sufficient to provide the annuity bequeathed in trust for the testator's brother Royston in item 3. These payments left a balance of only $6,627.37 in the estate, and that sum was equally divided between the mother and two sisters, so that they each received but $2,209.13 on account of the $10,000 legacies bequeathed to them in item 2. The agreement further provided that the share of the widow, mother, and two sisters in the proceeds of the sale of the packing business (which business had been purchased by the testator's brother Herbert) should be applied to the payment of the pecuniary legacies, and this was apparently done when the estate was distributed. On November 24, 1922, the widow, who had remarried, the mother, and the two sisters, entered into an agreement with each other to terminate the $20,000 trust created by item 4, and to divide the corpus of the fund by giving $12,000 to the widow, and $8,000 to the mother and two sisters. The agreement also contained the following clause:

"And each of said parties agree to render all and whatever assistance may be necessary or proper to accomplish the termination of said trust fund."

To carry out the terms of this agreement a bill was filed asking the court to pass a decree terminating the trust and directing the trustee, which was made defendant, to distribute the fund in the proportions agreed upon. The trustee answered, admitting the material facts alleged in the bill, and also conceding that, upon the termination of the trust created in item 4, the corpus of the trust fund would be applicable to the payment of any unpaid balance of the legacies bequeathed to the mother and two sisters in item 2 of the will, but the trustee denied the right of the complainants to end the trust by agreement, on the ground that the termination of the trust during the life of the widow would be contrary to the intention of the testator. In paragraph 9 of the bill, which was added by way of amendment and not answered by the defendant trustee, it is alleged that the testator's mother was wholly dependent upon him at the time of his death, and that since then the duty of supporting her has devolved upon his two sisters, both of whom are compelled to work to earn their own livelihood, and who find the task of caring for their mother increasingly difficult because of her advanced age and physical infirmities. It is further alleged that the two sisters do not want any part of the trust fund for their own use, but desire it solely for the purpose of applying it to the proper care and maintenance of their mother. The amendment then asks for another form of relief in the event the court should determine that the trust is not terminable at this time; but in the view which we take of the case it will be unnecessary to refer further to this alternative relief.

The case was submitted below on the bill, answer, and exhibits, and, the court having denied the relief prayed, and dismissed the bill of complaint, the complainants appealed.

The chief question presented by the appeal is whether or not the trust fund created in item 4 was, or can be, terminated by the agreement of November 24, 1922.

It is conceded that the $10,000 legacies provided in item 2 vested in the mother and two sisters at the death of the testator, and, as we have seen above, that the princpal of the $20,000 trust would, upon the death of the widow, be applicable to any unpaid balance of said legacies. It is also conceded that any part of the remainder of the $20,000 trust fund which was not needed to pay the balance of the $10,000 legacies would pass under the residuary clause of the will, and that the widow, mother, and two sisters took vested interests in whatever part of the estate passed under the residuary clause of the will.

It is thus apparent that all the parties who are beneficially interested in any way in either the income or principal of the trust fund provided for in item 4 are in court, and it is accordingly not necessary for the purposes of this case to inquire how the principal of the trust fund created in item 3 for Royston Robinson should be applied after Royston's death. Whether that would be applied to the $10,000 legacies, or would pass as a specific bequest to the widow, mother, and sisters, is immaterial here, because it is perfectly obvious that the remainder of the $20,000 trust fund would be applied first to the legacies, and the balance, if any, would pass under the residuary clause of the will, and all the interests in the legacies and in whatever part of the estate passes under the residuary clause are vested in the appellants.

The appellee contends that it was the manifest intention of the testator to provide by item 4 a fixed minimum annual income for his widow for life, and that the termination of the trust created to supply this income would clearly defeat the testator's intention. The appellants argue that the income from the trust fund could be sold by the widow, or attached by her creditors, or would go to her trustee in insolvency or bankruptcy, and that, as the happening of any of these contingencies would deprive the widow of the income, and the testator did not provide against them in his will, there is no reason why the trust should not be terminated. The precise question presented in this appeal does not seem to have been heretofore passed upon by this court, but there are a number of decisions bearing upon it in one way or another, and an examination of some of these will prove helpful in arriving at a proper conclusion in this case.

In Smith v. Towers, 69 Md. 77, 14 A. 497, 15 A. 92, 9 Am. St. Rep. 398, our predecessors laid down the rule that:

"The founder of a trust may provide in direct terms that his property shall go to his beneficiary to the exclusion of his

...