McIntyre v. Smith

• Decision Date: 04 April 1928
• Docket Number: 33.
• Parties: MCINTYRE ET AL. v. SMITH ET AL.
• Court: Maryland Court of Appeals

141 A. 405

154 Md. 660

MCINTYRE ET AL. v. SMITH ET AL.

No. 33.

Court of Appeals of Maryland

April 4, 1928

Appeal from Circuit Court of Baltimore City; H. Arthur Stump, Judge.

"To be officially reported."

Suit by Samuel K. Smith and another, administrators of the estate of Edward McIntyre, deceased, against Margaret M. McIntyre and others. From an order overruling demurrer to complainants' bill, defendants appeal. Affirmed.

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

Edgar Allan Poe, of Baltimore (Bartlett, Poe & Claggett, of Baltimore, on the brief), for appellants.

Charles F. Harley and Charles P. Coady, Jr., both of Baltimore (Burdette B. Webster, of Baltimore, on the brief), for appellees.

OFFUTT J.

Edward McIntyre late of Baltimore city died intestate on or about March 6, 1927. He had been twice married, and was survived by four children by his first wife, and by his second wife and two children by her. He had been at one time a tugboat engineer, and later with J. Edward Henderson, engaged in the business of repairing boats. In 1922 Henderson bought out his interest in that business, and McIntyre found himself in the possession of a considerable fortune, which was largely invested in bonds. He was a skilled mechanic, thrifty and industrious, but without any knowledge or experience in matters of business or finance, and he turned over all of his personal property, including his securities, to Margaret M McIntyre, Marie C. McIntyre, and Robert E. McIntyre, children of his first marriage, and they kept them and had them in their possession at the time of his death.

Upon his death letters of administration were granted to Charles P. Coady and Samuel K. Smith, who demanded of the three children named all securities delivered to them by their father, but they turned over only such securities as could not be passed by delivery and refused to surrender to the administrators bonds valued at $86,500 which would pass by delivery. The administrators then filed in the circuit court of Baltimore city the bill of complaint in this case to compel the three children to deliver to them the bonds which they had received from their father.

In addition to the facts to which we have referred, the appellees in their bill alleged That Edward McIntyre, their decedent, who was at the time of his death 71 years old "knew little or nothing about the handling of even his own finances; that he was untrained in and unfamiliar with the making of investments; * * * that the defendants acted as his confidential agents, and that he placed in their hands all of his personal property, and that they placed the evidences of said property and the securities in a safe deposit box or boxes controlled absolutely by them, and that the said Edward McIntyre had every faith and confidence and trust in them, and that their possession and custody of said property were upon trust for him, and that he and his said property were entirely in their hands, and that, having such confidence in them, it never occurred to him that they would betray his trust; * * * that your orators aver that, after the death of the said Edward McIntyre, the said defendants turned over to them only such securities as could not be passed by delivery and retained all bonds that could pass without indorsement, and among the bonds so retained were fifty-four thousand dollars ($54,000) Federal Land Bank bonds, thirty thousand dollars ($30,000) United States Liberty bonds and twenty-five hundred dollars ($2,500) foreign bonds (French, Belgium, and Denmark), and that these bonds and others they concealed from your orators and refused to turn over the same as property of their deceased father," and that they, "in utter violation of the trust reposed in them in their reversed confidential relationship, had withheld and retained from your orators unregistered negotiable coupon bonds of the value of approximately ninety thousand dollars; * * * that, when your orators demanded the delivery to them of said bonds, the defendants frankly admitted that they had such bonds in their possession, but they absolutely refused to turn them over to your orators," and that, "although the defendants received all of the securities from their father to be kept by them as his confidential agents and trustees, and to be delivered by them to him in his lifetime, or, upon his death, to his personal representatives, nevertheless, in absolute disregard of the trust so reposed in them, the said defendants accounted with your orators for only the nonnegotiable securities and kept in their possession said unregistered bonds of the value of approximately ninety thousand dollars ($90,000); * * * that such unconscionable action on the part of the said defendants was a part of a scheme conceived by said defendants to obtain a greater share of their father's estate than they were entitled to under the law; * * * that there was and could be no devolution of title to said bonds upon the defendants, because they held said bonds as the confidential agents, trustees, and custodians of their said father; * * * that the effect of the retention of said bonds by the said defendants will be the consummation of a fraudulent scheme on the part of the defendants to acquire a greater portion of the estate of their father than they would be entitled to by virtue of a legal distribution of his entire estate; * * * that relations of the utmost confidence existed between the said Edward McIntyre and his agents and trustees, the said defendants; and the securities which they are fraudulently and unlawfully withholding from your orators are impressed with a trust as aforesaid in favor of your orators and belong to the estate of the said Edward McIntyre."

Upon these allegations the appellees asked the court to declare that the bonds were their property and were held by the appellants in trust for them, to decree their delivery to them, to restrain the defendants from selling or disposing of them or "retaining" them from the appellees, to decree that a receiver be appointed to take charge of the bonds and collect the income "therefrom" pending the suit, and for such other and further relief "as the nature of their cause" might require.

The defendants demurred to the bill, but their demurrer was overruled, and from that order they have appealed.

From the facts alleged in the bill the parties draw different conclusions, the contention of the appellees being that the appellants hold the securities involved in the appeal upon a trust which a court of equity should enforce. while the appellants contend that the facts alleged are not sufficient to raise a trust in favor of appellees, but that they hold the securities under a claim of ownership, which a court of equity has no jurisdiction to decide, but that appellees must assert their claim in some appropriate action in a court of law, and the issue of law raised by these conflicting theories is whether upon the facts stated the action of the appellants in retaining possession of the securities is a breach of trust, or a breach of a contract of bailment for which they have an adequate remedy at law. Although appellants in their brief assert title to the bonds, that question is not in issue, for there is nothing in the bill to support the inference that appellants hold the bonds under a claim of title, or that they contend that they were given to them by their father during his life, the allegation being merely that they received the bonds in trust to be delivered to the decedent during his life, or to his personal representatives upon his death, and that in violation of that trust, they refused to deliver them to the appellees.

The jurisdiction of a court of equity to compel a surrender of specific securities may in such a case as this rest upon either of two grounds: (1) That because of the nature and character of the property a court of equity is the natural and appropriate forum in which to obtain such relief, because no adequate remedy is available at law; and (2) that the property is held under a constructive trust enforceable in a court of equity.

1. In Scarborough v. Scotten, 69 Md. 137, 14 A. 704, 9 Am. St. Rep. 409, it appears that Hugh F. Scarborough indorsed and delivered certain promissory notes and single bills to William Scotten and directed him to collect them and deliver the proceeds to Francina Scarborough, the wife of Hugh F. Scarborough, but Scotten died before the notes were collected, and his executors took possession of them. Francina Scarborough then assigned her interest in the notes to Hugh, her husband, and he demanded them of the executors of Scotten, and upon their refusal to surrender them, he filed a bill in equity against them, praying that they be compelled to surrender the notes to him. The lower court sustained a demurrer to the bill on the ground that the appellant had an adequate remedy at law; but this court reversed that ruling on the ground that there was no adequate or complete remedy at law, and in its opinion, after citing Story on Equity in support of the rule that equity will decree "the delivery up of deeds and other writings to those who are entitled to them," it quotes with apparent approval parts of the following passage from the same author:

"But where the title to the possession of deeds and other writings depends upon the validity of the title to the property to which they relate, and he is not in possession of that property, and the evidence of his title to it is in his own power, or it does not depend upon the production of the deeds or writings, of which he prays the delivery, in such cases he must first establish his title to the property at law before he can come into a court of equity for a

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