McLaughlin v. Barnum

• Decision Date: 08 December 1869
• Parties: AUGUSTUS MCLAUGHLIN v. DAVID BARNUM and Augustus K. Barnum. David Barnum and Augustus K. Barnum v. Augustus McLaughlin, and Others.
• Court: Maryland Court of Appeals

31 Md. 425

AUGUSTUS MCLAUGHLIN v. DAVID BARNUM and Augustus K. Barnum.

David Barnum and Augustus K. Barnum v. Augustus McLaughlin, and Others.

Court of Appeals of Maryland

December 8, 1869

Cross appeals from the Circuit Court of Baltimore City.

By the decree of this court pronounced on the first appeal, December 21st, 1866 (26 Md. 119), and the opinion accompanying that decree, it was definitively adjudged, that the first clause in the will of David Barnum, the testator, was void and inoperative; that the third, eighth, ninth and tenth clauses and the last paragraph of the fourth clause, and the entire codicil, shared the same fate, and that the complainants were, therefore, entitled to relief, the extent of that relief, however, being left to be settled upon further proof and in the further progress of the cause.

The decree simply reversed the decree of the Circuit Court of Baltimore City, from which the appeal was taken, and remanded the cause for further proceedings.

After the cause had been remanded to the Circuit Court, the complainants filed their bill of revivor and supplement chiefly for the purpose of following the profits realized by the principal defendants by the use of the original premises into additions made to them.

A commission was issued, and a great deal of testimony was taken and returned, and the cause having been brought to a hearing, the Circuit Court, on the 14th of July, 1869, passed a decree directing,

1st. A sale "of the grounds which formed the site of the City Hotel as it existed at the death of the testator, David Barnum, with all the buildings and improvements thereon, as now existing, including as well the hotel part thereof, as the rooms or apartments described in the third and fourth clauses of the said will, but excluding therefrom the lot described in the first clause of the will, as Mrs. Ann Barnum's lot, with the buildings thereon."

2nd. That said sale be made, "subject, however, to the ground-rents, and to the operation of the deeds of trust from David Barnum, etc., to george Brown and D. Winchester bearing dates respectively September 27th, 1825, and May 11th, 1826."

3rd. An account to be taken "of the rents and profits of the said City Hotel buildings and grounds, so adjudged to be sold, from the time of the accrual of the title of the complainants," (October 31st, 1853,) "the same to be taken on the basis of a reasonable rent for the said premises, as they were left by David Barnum at his death, without the meliorations and improvements made by Andrew McLaughlin after the death of David Barnum, and before the filing of the original bill in this cause."

4th. And an account "of the present value of all meliorations and improvements so made by Andrew McLaughlin, the same to be estimated according to the increased vendible value of said premises at the time of said decree, by reason thereof."

5th. Also to ascertain and report the annual amount of necessary and proper repairs, incurred by the occupiers of said property, in each and every year, since the 31st of October, 1853.

6th. And "in the event that the share of the complainants in the rents and profits should be less than their proportion of the present value of the improvements and meliorations of the premises, to be ascertained as aforesaid, the deficiency should be a charge on the complainants' shares of the proceeds of sale to be made under this decree."

From this decree the complainants and Augustus McLaughlin, one of the defendants, appealed.

The cause was argued before BARTOL, C.J., BRENT, MILLER, ALVEY and ROBINSON, JJ.

T. A. Linthicum, George H. Williams, and Thomas S. Alexander, for the complainants.

The lot which is described in the decree as Mrs. Ann Barnum's lot, ought not to be excepted from the sale to be made. In the answer of the defendant to the original bill, it is admitted that this lot is "within and as part of the real property used for the said City Hotel, and covered by the structures making up the City Hotel." The complainants' plat No. 2 shows the connection, and the defendants have shown that the ladies' water-closets and baths are in the building on this lot, and the drainage therefrom and from the gentlemen's water-closets are carried off by one common sewer, which is shown to have been constructed at a considerable cost. Constituting thus a part of the establishment, embracing offices indispensable to the use thereof, and which seem to have been placed there originally by the testator, it is to be assumed that Andrew McLaughlin purchased out the reversionary interest in said lot for the common benefit of the parties interested in the City Hotel buildings and grounds. Rothwell v. Dewes, 2 Black, 618; Van Horne v. Fonda, 5 John. Ch. 407; Palmer v. Young, 1 Vern. 276; Featherstonhaugh v. Fenwick, 17 Ves. 310; Holdright v. Gillespie, 2 John. Ch. 30; Blenitt v. Merritt, 7 Bro. P. C. 367; Griffin v. Griffin, 1 Sch. & Lefr. 352; Owen v. Williams, Ambl. 734.

The principle of these cases is also supported by Spindler v. Atkinson, 3 Md. 409.

The sale ought not to be made subject to the operation of the deeds of trust from David Barnum, etc., to George Brown and D. Winchester, bearing dates respectively September 27th, 1825, and May 11th, 1826.

The counsel for the parties had agreed that deeds of trust were made creating City Hotel stock to considerable amounts. But there is nothing to connect such admission with the deeds described in the decree.

There is nothing in the record to show that the debts secured by the deeds of trust, admitted by the agreement, were charged exclusively on the premises decreed to be sold.

If this clause be permitted to remain in the decree, the defendants will have an advantage over the complainants and all others who may be disposed to bid at the sale. The defendants know whether any portion of this debt, and if any, what part thereof, is outstanding. They can estimate the precise value of this supposed incumbrance, if it has not been wholly extinguished. The complainants and outside parties would be compelled to bid in ignorance of the fact, and consequently on the hypothesis that the whole original debt, principal and interest, may be enforced against the property. This clause of the decree, therefore, ought to be stricken out, and it ought to be declared that the purchaser shall have an indemnity against those debts, if any are yet outstanding, to the extent of his purchase-money, and that an account be taken of such part of said debts as may be outstanding. It appears that at least $10,200 of said debt has been paid by Andrew McLaughlin in his lifetime. McGowan v. Yerks, 6 John. Ch. 450.

The complainants are entitled to an account of profits actually realized by the occupation and enjoyment of the premises from the commencement of their title, and ought not to be limited to an occupation-rent for the ease of the defendants.

A trustee is accountable for all the profits he has realized from the use and employment of the trust estate; and where the trust estate has been converted, the cestui que trust has the election to follow the funds into its new form of investment, and claim an account of the profits thence resulting, or hold the trustee accountable for the trust estate in its original form. Diffenderffer v. Winder, 3 G. & J. 311; Goodburn v. Stevens, 5 Gill, 23; Docker v. Somes, 2 My. & K. 655.

If one will confuse his property with that of another inextricably, he must endure the loss occasioned by such unauthorized admixture. Chappell v. Cox, 18 Md. 513; Rose v. Bevan, 10 Md. 467; Hamilton v. Rogers, 8 Md. 301.

The principle of equity ever has been that the trustee shall account for all the profits which he has realized from the employment of the fund. Robinson v. Robinson, 9 Eng. Law & Eq. 69-75; Wedderburn v. Wedderburn, 2 Keen, 622; Wedderburn v. Wedderburn, 4 My. & Cr. 41; Oliver v. Piatt, 3 How. 333.

In the next place, there can be no doubt of the right of the defendants to be allowed the cost of repairs. The only question is in regard to their right to an allowance for improvements.

But the complainants deny that Andrew McLaughlin is to be treated as a bona fide possessor, and therefore deny his right to any allowance for improvements. He entered under the will of David Barnum, and with notice, therefore, of its contents and of the true construction thereof. 2 Fonbl. Eq. B. II, ch. 633; Tongue v. Nutwell, 17 Md. 212; Casey v. Inloes, 1 Gill, 502; Gray v. Bartlett, 20 Pick. 193; Williams v. Banks, 11 Md. 198; Cooke v. Kell, 13 Md. 469; Miller v. Williamson, 5 Md. 219.

It is also to be noted that Andrew McLaughlin does not, in his answer, deny notice of the claim of the complainants, although the bill charges him with notice. And one who claims the protection of a purchase bona fide made for valuable consideration, and without notice, must, by plea or answer, expressly deny notice, though it be not averred. Mitf. Pl. 320; Baynard v. Norris, 5 Gill, 468; Harris v. Fly, 7 Paige, 421; Denning v. Smith, 3 John. Ch. 345.

Holding then with notice of an adverse title, he is to be treated as a wrongful possessor. 2 Story's Eq. sec. 799 a, defines "an innocent possessor" to be one who is "without any notice of any defect in his title." If he has notice of the instrument under which the adverse title is or may be advanced, he is a wrongful possessor. Bright v. Boyd, 1 Story, 494; Green v. Biddle, 8 Wheat. 1; Dormer v. Fortescue, 3 Atk. 130, 134; Strike's Case, 1 Bland, 77.

It is not necessary to show that Andrew McLaughlin entered mala fide--it is necessary for them to show affirmatively he entered bona fide. There may be a case of an entry not bona fide by a party who enters without bad faith; such a person is not entitled to...