Wm. D. Shellady, Inc. v. Herlihy

• Decision Date: 11 November 1964
• Docket Number: No. 39,39
• Citation: Wm. D. Shellady, Inc. v. Herlihy, 204 A.2d 504, 236 Md. 461 (Md. 1964)
• Parties: , 16 A.L.R.3d 420 WM. D. SHELLADY, INC. v. Thomas HERLIHY, Jr., and Albert J. Matlusky, Executors of the Estate of R. Carl Bamberger, Deceased.
• Court: Maryland Court of Appeals

Page 461

236 Md. 461

204 A.2d 504, 16 A.L.R.3d 420

WM. D. SHELLADY, INC. v.Thomas HERLIHY, Jr., and Albert J. Matlusky, Executors of the Estate of R. Carl Bamberger, Deceased.

No. 39.

Court of Appeals of Maryland.

Nov. 11, 1964.

Robert C. Thompson, Easton, for appellant.

Edward T. Willer, Easton (Henry P. Turner, Easton, on the brief), for appellee.

Before HENDERSON, C. J., and PRESCOTT, MARBURY, SYBERT and OPPENHEIMER, JJ.

OPPENHEIMER, Judge.

This is an appeal from an order of the Circuit Court for Talbot County construing a will in which the testator used ambiguous words to describe the subject of a bequest.A suit for construction of the will of R. Carl Bamberger was filed by his executors, the appellees.The executors are Thomas Herlihy, Jr.(Herlihy), the testator's attorney who had prepared the will, and Albert J. Matlusky(Matlusky).The suit was filed against the legatees under Item 2 of the testator's will and Wm. D. Shellady, Inc., a Delaware corporation, (the corporation) of which the testator had been the president and of whose stock he was the largest holder.Matlusky was the secretary-treasurer of the corporation and the second largest holder of its stock.

Item 2 of the will provides as follows:

'I give and bequeath to each of the following named legatees, shares of Class 'B' stock of Wm. D. Shellady, Inc. as follows:

 'Albert J. Matlusky--9 shares
                 Reinhardt F. Bamberger--9 shares
                 Earl Bamberger--5 shares
                 Elizabeth Brosnahan--5 shares
                 Mable McCrea--32 shares
                 Vincent J. Colombo--4 shares.
                 Valdemar Lundberg--4 shares.
                 John Gibbons--4 shares.
                 Charles Mason--4 shares.
                 George Heinold--4 shares.
                 Jack Denny--4 shares.
                 Harry Donoho--4 shares.
                 Thomas Point--4 shares.
                 Mary T. Kaminski--4 shares.
                 Holy Trinity Lutheran Church of Wilmington, Del.--8 shares.
                

'The bequest of stock to Holy Trinity Lutheran Church is to be considered as a memorial to my mother and father.I request each and every one of the aforementioned legatees before selling or disposing of the stock to offer the same to Wm. D. Shellady, Inc. and that the corporation acquire the stock at book value.'

The persons and church named in Item 2 are hereinafter referred to collectively as 'the legatees'.

By the third item of his will the testator bequeathed his household effects and automobile to his housekeeper, Mabel McCrea, one of the legatees under Item 2; by the fourth item, he directed that she should have charge of his funeral arrangements.In the fifth item he devised and bequeathed the residue of his estate to the corporation.By the sixth item, he designated Herlihy and Matlusky to be his executors without bond.

After the taking of testimony, Chief Judge J. DeWeese Carter filed an opinion which, by stipulation of counsel representing all parties who appeared or wished to appear at the hearing, sets forth all the facts and questions which would be set forth in a separate statement under Maryland Rule 826g.

In accordance with his opinion, Judge Carter filed an order which provides inter alia that 'the words 'Class B' immediately following the words 'shares of' in Item 2 of the subject Will, be and the same are hereby stricken out and disregarded' and 'that the Testator by Item 2 of the subject will bequeathed to the legatees therein designated, the 104 shares of Class A stock in Wm. D. Shellady, Inc. which he owned at the time of his death in the proportions therein specified * * *.'The corporation has filed this appeal.The executors are named as appellees but have taken no part in the appeal.Affirmation of the lower court's order is urged by certain of the legatees other than Matlusky (some of the legatees did not take part in the proceedings below or in this appeal).

Upon the testator's death it was found that he owned 104 shares of the Class A stock of the corporation but did not own any shares of the corporation's Class B stock.

At the trial below the court admitted extrinsic testimony as to the meaning of Item 2 of the will, based on the fact that there was a latent ambiguity.Extrinsic evidence pertaining to the circumstances of the testator and of the corporation was clearly admissible.Darden v. Bright, 173 Md. 562, 568-570, 198 A. 431(1938) and the authorities therein cited;Miller, Construction of Wills, §§ 42-45(1927).

The evidence showed that in 1928 the testator and Harry W. Mason purchased all the stock of the corporation from the estate of William D. Shellady as equal partners.The business conducted by the corporation was that of installing and supplying plumbing facilities.Shortly prior to 1945, the testator and Matlusky purchased Mason's interest.The testator served a president until 1954, when he suffered a heart attack, followed by a paralytic stroke a few months later.Soon after his illness, he moved his residence from Wilmington, Delaware, to Talbot County; he relinquished the presidency of the corporation but continued as a director.He partially recovered in 1955 and from that time until 1957 made visits to the office of the corporation in Wilmington.He executed his will in 1954 and died in December, 1957.The testator had no children and had been separated from his wife since 1945.Mabel M. McCrea acted as his housekeeper and nurse from 1954 until his death.

At the time of the execution of the will and at the time of the testator's death, the corporation had issued and outstanding 174 shares of Class A stock, which was the voting stock, and three shares of Class B stock, which was non-voting, and which was owned by Frank H. Hanby, the vicepresident.The testator, both at the time of the execution of the will and at the time of his death, owned 104 shares of the Class A stock; 53 shares were owned by Matlusky and 17 shares by Harry J. Donoho, who succeeded the testator as president.In 1945 or 1946, the corporation had issued 23 shares of its Class B stock which was all of that stock ever issued; 20 shares of the Class B stock were originally owned by Matlusky and three by Hanby.Matlusky later surrendered his 20 shares of Class B stock for Class A stock.The testator had never in his lifetime owned any of the Class B stock.The only substantial assets owned by him at the time of his death were the 104 shares of the Class A stock.The corporation's financial statement for 1962 shows as a liability an indebtedness due to the testator's estate of some $50,000, which is disputed by the corporation.The book value of the Class A stock at the time of the testator's death was $898.40 share.

The persons named as legatees under Item 2 of the will included the testator's brother; Matlusky; the testator's nephew and niece; his housekeeper; several employees of the corporation; and the church, whose bequest the testator stated was to be considered as a memorial to his parents.Judge Carter found that the legatees were the natural objects of his bounty.In his opinion, the Chancellor stated: 'Under these circumstances, it appears obvious it was the testator's intention to bequeath his Class A stock in Item 2, as the only stock he ever owned, and that the reference to 104 shares of Class B stock was an error.'The court applied the maxim of falsa demonstratio non nocet to the language employed in Item 2 by eliminating the words 'Class B' so that the bequest reads: 'I give and bequeath to each of the following named legatees shares of stock of Wm.D. Shellady, Inc. as follows:'

The appellant, the corporation, contends that the court below erred in applying the maxim based solely on the evidence admitted.It also contends that the court erred in excluding certain testimony of Herlihy and Matlusky and the rought draft of a letter from the testator to Herlihy, and that such evidence, if admitted, would have confirmed that the provisions of Item 2, as written, accurately represented the intention of the testator at the time of the execution of the will.

I

As Item 2 is written, all the bequests to the legatees named therein, in the proportions set forth, would become inoperative.The testator owned no Class B stock, either at the time he executed the will or at the time of his death.The gift of stock is a specific legacy and, as a general rule, the non-existence of the subject of such a legacy at the testator's death will defeat the gift.Gardner v. McNeal, 117 Md. 27, 35-37, 82 A. 988, 40 L.R.A.,N.S., 553(1911)andGelbach v. Shively, 67 Md. 498, 10 A. 247(1887).See alsoHall v. Elliott, 236 Md. 196, 202 A.2d 726(1964).As Item 2 is written, the 104 shares of Class A stock which the testator owned would pass to the corporation as the testator's residuary legatee.The book value of these 104 shares of Class A stock at the time of the testator's death was in excess of $93,000.These shares were the only substantial assets owned by the testator at the time of his death.

The maxim falsa demonstratio non nocet, ¹ which originated in England, has been applied by this Court as well as by many jurisdictions of the United States.Littig v. Hance, 81 Md. 416, 32 A. 343(1895);Scarlett v. Montell, 95 Md. 148, 51 A. 1051(1902);Selwood v. Mildmay, 3 Ves. Jr. 306(1797);Miller v. Travers, 8 Bing. 244(1832);Wigmore, Evidence § 2476(3d ed. 1940); Jarman on Wills, 1146 (8th ed. 1951); Atkinson, Law of Wills, 283 (2d ed. 1953);Warren, Interpretation of Wills--Recent Developments, 49 Harv.L.Rev. 689(1936);94 A.L.R. 26, 74.

The application of the doctrine expressed by this maxim is explained in Littig v. Hance, supra, as follows:

'Every application of this maxim implies that a mistake has occurred in the use of language.In all such cases the legal question is, conceding a mistake, is the intent clear upon the whole language employed?Criss v. [English, Executor of] Withers' Ex'r, 26 Md. 569. To illustrate: In the case of *Selwood v. Mildmay, 3 Ves. [Jr.] 306(which is designated as a very strong case by Chief Justice Tindal in Miller v. Travers, 8 Bing. 244), the testator...