Staley v. Safe Deposit & Trust Co. of Baltimore

• Decision Date: 20 December 1947
• Docket Number: 56.
• Citation: 56 A.2d 144,189 Md. 447
• Parties: STALEY et al. v. SAFE DEPOSIT & TRUST CO. OF BALTIMORE et al.
• Court: Maryland Court of Appeals

56 A.2d 144

189 Md. 447

STALEY et al. v. SAFE DEPOSIT & TRUST CO. OF BALTIMORE et al.

No. 56.

Court of Appeals of Maryland

December 20, 1947

Appeal from Circuit Court of Baltimore City; Emory H. Niles, Judge.

Suit by Safe Deposit & Trust Company of Baltimore and Augustus E Staley, Jr., trustees under an agreement of trust dated October 18, 1934, against Andrew Rollin Staley and Lucille W Staley, his wife, and others, for a declaratory decree construing the trust agreement. From an adverse decree Andrew Rollin Staley and Lucille W. Staley, his wife, appeal.

Decree reversed and bill dismissed.

Carlyle Barton, of Baltimore, and Carl R. Miller, of Decatur, Ill. (Sturart E. Brown, Jr., of Baltimore, on the brief), for appellants.

William R. Semans, of Baltimore, for James J. Ryan, guardian ad litem for Richard Seth Staley, infant, appellee.

John M. Butler and Venable, Baetjer & Howard, all of Baltimore, for Safe Deposit & Trust Co. and Augustus E. Staley, Jr., trustees, appellees.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, HENDERSON, and MARKELL, JJ.

MARKELL Judge.

This is an appeal from a declaratory decree construing a trust agreement, dated October 18, 1934, between Augustus E. Staley, of Decatur, Illinois (now deceased), donor, and Safe Deposit and Trust Company of Baltimore, trustee, and Augustus E. Staley, Jr., of Decatur, co-trustee. All the trust estate is held by the trustee. Originally all, and now almost all, of it consists of stock of the A. E. Staley Manufacturing Company. The value of the estate is now about $4,500,000, the annual income about $100,000. The life beneficiary is Andrew Rollin Staley, appellant, one of the donor's five children. On the same day (October 18, 1935) the donor executed four other trust agreements, identical except as to names of beneficiaries, for his four other children as life beneficiaries. The donor died in 1940. All five children are still living. Andrew was born in 1907.

The trust agreement is an elaborate instrument, carefully prepared by the donor's Illinois counsel. Its provisions now material may be briefly summarized. Subject to payment of specified income to the donor for life, the net income is to be paid (1) to Andrew for life, and until termination of the trust (2) upon Andrew's death, 'if at the time of his death he be married and living with his wife,' then 'per capita, share and share alike, to the said surviving spouse of Andrew' until death or remarriage 'and to such of the children of * * * Andrew as shall be living, from time to time,' and to the living 'descendants' of deceased 'children,' per stirpes, and (3) after the death of Andrew, his surviving spouse [or after her remarriage] and all his 'children and descendants', to 'such of the children of the Donor, namely, Ione * * *, Augustus * * *, Mary * * * and Ruth * * * as shall be living from time to time' and to the living descendants of those dead, per stirpes; (4) upon the termination of the trust the corpus is to be paid, 'share and share alike, to the bodily heirs' of Andrew then surviving, and the surviving descendants of 'any deceased bodily heir,' per stirpes. The trust is to terminate (a) twenty years after the death of Andrew or (b) forty years after date, if Andrew is then dead. If the Trustee should 'be discharged by a court of competent jurisdiction' (e.g. resign), the donor's widow, and if she be dead, then 'the presiding judge of the Circuit Court in Macon County, Illinois' may appoint a corporation or bank (not necessarily of Maryland) as trustee.

The only question submitted for declaratory decree and decided was whether, in the payment of income, 'the children' of Andrew include an adopted child, Mary Elizabeth Staley, born 1938, adopted under the laws of Illinois in 1940. The decree below answered this question in the negative. The adoptive parents, Andrew and his wife, appeal.

If Andrew dies before October 18, 1954, or after October 18, 1974, the trust will continue and the income will be distributed for twenty years after his death. If he dies after October 18, 1954, and before October 18, 1974, the trust will terminate on October 18, 1974. In other words, the provisions for distribution of income after his death may become operative for any period from one day to twenty years. If he dies at seventy, they will not become operative until thirty years hence. Until he dies, the administration of the trust cannot be affected by the question now raised. If Andrew should survive Mary Elizabeth, the question will never become material unless he hereafter adopts another child. If the Trustee should resign, the distribution of income to 'children' may never be made in Maryland.

Of the donor's five children each has been married and has one or more natural children. All but one (Augustus) have been divorced and remarried (to different spouses); one has been married four times and divorced three. When the trust agreements were executed three of the divorces had occurred and one was contemplated; none of the five children had adopted a child or is shown to have contemplated adoption. Andrew was first married in 1929, has a child, Richard Seth Staley, born in 1930, was divorced in 1930, and was married in 1934. His present wife is not able to have children. None of the donor's children except Andrew has ever adopted a child. Andrew, his wife and thier adopted child, Mary Elizabeth, now live in Arizona. Andrew's son, Richard, lives with Andrew's former wife in Illinois. None of the donor's children or descendants or their spouses, live in Maryland. Appellants stress the family record of marriages and divorces and the provision for surviving spouses, as showing that the donor contemplated the possibility of future separations, divorces and marriages--and also adoptions--i.e., intended the income to go to whomever his children might choose as spouses or as 'children.' They principally stress the provisions for distribution of income to 'children' and corpus to 'bodily heirs,' as showing that adopted children do not share in corpus but share in income.

The bill was filed by the trustees against all the donor's children, their spouses and natural children, Andrew's adopted child and 'any persons not in being whose interest in the subject matter of this suit may be affected by any decree or order which may be entered in these proceedings.' It alleges that: Andrew has advised the trustees that he is planning the establishment of a trust estate, wishes to make equal provision for Mary Elizabeth, Richard and 'such other children as he may have,' and had inquired of the trustees whether or not they will, in the event of his death leaving Mary Elizabeth or her descendants surviving, consider her a 'child' within the provisions for distribution of income and will distribute income accordingly. The trustees are advised that under the language of the trust agreement doubt exists as to whether or not the donor intended to include as a recipient of income Andrew's adopted child. Due to the uncertainty which exists regarding this question, the trustees feel that they should seek the guidance and protection of the court in the interpretation of the trust agreement, 'to the end that upon the death of * * * Andrew * * * distribution of the income from the trust estate shall be made by the trustees in accordance with such decree as this court may pass.' The bill prays (1) assumption of jurisdiction over the trust agreement, (2) a declaratory judgment as to the meaning of 'children,' and (3) general relief. Process by publication was prayed against all the defendants, including 'persons not in being'.

Of the defendants, Andrew and his wife appeared and answered; the other adults did nothing. Andrew alleges that it was the intent of the donor that 'children' includes adopted children as sharing in income. Andrew and wife join in the prayers of the bill. A guardian ad litem (the same person) was appointed for Mary Elizabeth and Richard, all the other infants and later for 'any * * * person not in being.' Acts of 1945, ch. 723, Art. 16, sec. 252A. Counsel was appointed for Richard, and filed an answer of Richard's guardian ad litem, averring that the adopted child would not be entitled to share in either income or corpus. The usual formal answer was filed by the guardian ad litem for the other infants. At the hearing counsel for Andrew and wife purported also to appear (apparently without appointment by order or court) for Mary Elizabeth. At that time plaintiffs filed an amended petition for appointment of a guardian ad litem for infant defendants and 'persons not in being,' the appointment was made, and an amended answer was filed by the guardian ad litem for all such defendants and persons not in being, including Mary Elizabeth, averring that Mary Elizabeth would not be entitled to share in either income or corpus. No appeal was taken by Mary Elizabeth through her guardian ad litem or otherwise. The appeal of Andrew and wife was ably argued by Illinois and Maryland counsel for appellants, in support of the position that in distribution of income 'children' includes adopted children, and by Maryland counsel for Richard in support of the opposite position and the decision below.

The trust agreement, e.g., the word 'children,' should be construed according to the law of Illinois, the donor's domicil. Prince do Bearn v. Winans, 111 Md. 434 470, 74 A. 626; Restatement, Conflict of Laws, § 296. Apparently without formal notice and request (Art. 35, sec. 59 ; Prudential Ins. Co. v. Shumaker, 178 Md. 189, 197, 198, 12 A.2d 618) it was informally or tacitly agreed by all parties and the lower court, and it was agreed at the argument in this court, that judicial notice shall be taken of 'the common...