Barnum v. Barnum

26 Md. 119 | Md. | 1866

Weisel, J.,

delivered the opinion of this Court.

The controversy in this case arises upon the construction of the will of the late David Barnum, of Baltimore, the founder and proprietor of the City Hotel of that city. It was executed on the 29th of August, 1843, with a codicil made ou the 2nd day of September following. They were admitted to probate on the 13th day of May, 1844.

After a careful examination of these papers, as spread out in the record, we can present the following as an analysis of them, by which their provisions will be the more clearly understood, and the intention of the testator more readily ascertained. The will and codicil alone furnish the facts in the statements which this analysis contains.

The principal part of his estate was the City Hotel buildings and grounds in the city of Baltimore, and the furniture and chattels in that hotel. To this part of his estate his entire will and codicil relate, with the exception of clause fourth, (save its concluding sentence,) and clauses fifth, sixth and seventh. The eleventh appoints executors, but they have duties to perform, in certain events, in relation to this property. The controversy is about this portion of his estate.

He had a family. A wife and children named in the ■will, among whom, and their representatives, in case of their deaths, the nett rents of the hotel were to be distributed, composed, as we may fairly conclude, the family he had in contemplation when he used the term.

He had debts to provide for, as therein declared. These were of two classes, a City Hotel stock debt and his general debts.

He undertook to make a disposition of this City Hotel property and furniture in a way which, in his judgment, would prove a sure and better resource for his family. In doing so, he did not forget or overlook his duty to his creditors of both classes; but whilst providing for his family from the rents and profits of the property, he primarily charged these with the payment of the regularly accruing interest upon the City Hotel stock, and of his general debts. He introduced this plan by an expression of a desire, at the beginning of the first clause of the will, that his City Hotel property in Baltimore should be permanently conducted, after his death, as a hotel, and of his belief that the property thus employed would prove a sur© and better resource for his family.

The plan is set out in the first, second, third, eighth, ninth and tenth clauses, and the last paragraph or sentence of the fourth clause of the will, and the entire codicil. These should be read together. The second clause refers to the first clause alone, as containing his views or plan ; but it is very manifest that the other clauses here specified and the codicil, would share the fate of the first, by the application of the second clause, whenever declared operative to disappoint those views.

Disregarding, then, at present, the second clause, and reading the other clauses above designated, and relating to this property, together, we discover his disposition of it to he this : He devised all his said hotel property, real and personal, to two trustees, his wife and his son, Ephraim K. Barnum, and the survivor and the survivor’s heirs. By clause tenth, the continuance of the trust is provided for, in case of the death of both of said trustees. The property thus devised is described as “all the buildings of said City Hotel, and all the grounds thereof, and all the furniture, and all other chattels of said hotel, now or hereafter attached to it or used for it.” The trusts are declared. The trustees were to lease the said property and apply the rents in a specified mode. With this view he divided the buildings, &c., into what he devoted to hotel purposes, and what he designed for other uses, calling or distinguishing the former as the hotel part of the property. The hotel part was not to “include any of the offices or apartments of the basement story of the City Hotel buildings, save only what was used for the lower bar and lunch-room of the hotel, and the apartments used for the culinary and other purposes of the hotel buildings.” All else, including furniture and chattels, are denominated in the will as “the hotel part of said buildings and grounds, furniture and chattels.”

This hotel part the trustees were to permit Zenus Barnum and Andrew McLaughlin, (or one of them, if both would not agree to be tenants.) to use, occupy and enjoy as tenants, upon condition that they would conduct it as a hotel, and for the term of three years, at the yearly rent of ten thousand dollars, payable quarterly; and if they, or either of them declined to rent it, or taking it, their tenancy should by any means be terminated, the trustees should, from time to time, during the period hereafter mentioned, lease the said hotel part for terms of years not exceeding ten years, for such yearly rent as his executors or administrators, with'the will annexed, should approve, to any person who they should be satisfied would well conduct it as a hotel; the rents under all the leasings to be primarily chargeable, in exoneration of all his other estate, real and personal, with the interest on the City Hotel stock and his general debts.

After deduction for the interest on the hotel stock and his debts, the trustees were directed to apply annually the rents of the said hotel part as follows: Three hundred dollars annually to his widow, in quarterly payments, in consideration of her ownership of a piece of ground constL tuting a part of the hotel premises, (with power in her to take possession of it and use or sell it, in case of default in any payment; ) and of the residue, one-third to his wife for life, and the other two-thirds “in equal shares to and among his children and their respective heirs (per stirpes,) Eliza Stanard, Francis McLaughlin, Ephraim Kirby Barnum, Richard Barnum and Augustus Barnum;” these children and their respective heirs in like manner being •entitled at his wife’s death to her one-third of the said ¡rents.

'The rents of the offices and rooms in the basement, not included in the hotel part, he devised as follows: of room No. 4, to his daughter Frances McLaughlin and her heirs; of room No. 5, to his daughter Eliza Stannard and her heirs ; of room No. 6, to his son Richard Barnum and his heirs; of room No. 10, to his granddaughter Frances Waterman and her heirs; of room No. 9, to his grandson David McLaughlin and his heirs ; of room No. 11, to his son Augustus Barnum and his heirs ; of rooms Nos. 7 and 8, to Ephraim K. Barnum and his heirs, (in case the testator should sell the coal land devised to him in the 6th clause of the will;) and of office No. 3, to Zenus Barnum for Ms life.

He directed that if the devise of the rents of said rooms 7 and 8, to his son Ephraim, should not take effect, they should he deemed part of the general residue of his estate; and that the trustees should from time to time rent out said offices or rooms, or allow the same to be done by the respective devisees of the rents thereof.

By the 8th clause or article, a discretionary power is given to his executors or administrators, c. t. a., to mortgage the City Hotel buildings, furniture and chattels, on such terms as they might deem expedient, to obtain money for paying his general debts, and then to set apart such portion of the rents of the hotel part of said buildings as they might deem expedient, for reducing the principal of the mortgage as well as paying the mortgage interest, either by way of actual payment to the mortgagees, or of a sinking fund to accumulate for the eventual extinction of the mortgage principal.

The proceeds of sales of his country seat, on the Harford turnpike,. (4th clause,) are also charged with the payment of these debts in case the arrangement for the purpose, in the 1st clause, should prove impracticable, or if money could not be procured by mortgage as above. These two latter modes to he first availed of if practicable. The tenants were to be bound to keep the furniture and chattels in good condition as delivered to them, and to replace such as should be lost or destroyed, or rendered useless by wear or tear, except by fire, against which risk the trustees were to keep the furniture and chattels insured in an amount deemed prudent, as also the said City Hotel buildings.

The period during which this leasing was to take place, and this trust to continue, was to be ‘‘so long as his said children, or any children or descendants of them, or of any of them, left by them, or any of them, at the death of them, or any of them, shall live; it being understood that any lease made during the period aforesaid, shall have full effect and continue for its stipulated term, notwithstanding the cessation of all of said lives before the end of the term.”

We may observe here, though it may not be material in the examination of the questions before us, that the various provisions made for the payment of his general debts, do not interfere with the trust. That is still to subsist. If a mortgage were effected, these debts, by that means, would be consolidated and bind the hotel property in the hands of the trustees, and the rents would be made applicable by them to the consolidated debt and its interest, in the mode specified in the 8th clause, instead of in the way contemplated in the 1st clause or article. By this clause, the executors or administrators, cum, testamento annexo, were to approve of the yearly rent for which the trustees were to lease the hotel part of the property, ( except that for the three first years to Zenus Barnum and McLaughlin.)

By the 8th article, the collateral power was conferred upon them to mortgage, if they deemed it expedient, the City Hotel buildings, furniture and chattels, to pay his said debts. .They were the proper, legal parties to pay debts, and this may explain why the testator, in providing assets for the purpose, conferred upon them these powers of approval and control over the property. The hotel stock debt, it seems, was to remain in its original form as a distinct, peculiar debt, the rents applicable to the interest only on it. His intention, however, appears to be, not to extinguish his general debts by applying all the rents of the hotel part primarily to that object, for his family was to he supported at the same time. If an annual partial application proved too slow, and creditors could not wait, then a mortgage could. be resorted to. If that failed, or when made were passed to a foreclosure, then the avails of his country seat, on the Harford turnpike, should he brought into requisition for this purpose.

This, we consider, is the purport and reading of the will in the clauses mentioned respecting the City Hotel property, real and personal, and constitutes the testator's plan or views for permanently conducting the hotel daring the period described, as a sure and better resource for his family, including a provision for the payment of his debts at the same time. For these the said property would have been legally hound by the testamentary and chancery laws of Maryland, a condition which its owner would not likely disregard or overlook in making a settlement for his family.

The first and very important question which arises on this statement of the contents of the will, and which has been most ably discussed at the hearing of this cause, is whether the period described in the will through which the leasing by the trustees is to run, transgresses the rule of law against perpetuities ; whether it exceeds a life or lives in being at the testator’s death, and twenty-one years and the allowed fraction of a year afterwards. That period is thus described : “and the period during which my trustees and their heirs and successors shall have the power, and are required to lease as aforesaid, shall be so long as my said children, or any children or descendants of them, or of any of them, left by them, or any of them, al the death of them, or any of them-, shall live; it being understood that any lease' made during the period aforesaid, shall have full effect and continue for its stipulated term, notwithstanding the cessation of all of said lives before the end of the term”

If; was very ingeniously pressed upon the Court by the counsel for the appellees, in the argument, that a- fair philological examination of this sentence would confine the time within the rule; and that the word left, by assigning’ to it a past signification and allowing the will to speak as ef the day of the testator’s death, would indicate an intention to point to his own children, and children and descendants of children living at the time of his own decease ; and that upo-n this construction the powers of the trustees would not* and were not, intended to endure beyond the lives of persons who should, at the moment of the testator’s death-, answer the-description of children or descendants of ehildren; in- other words that descendants of children, horn after the death of the testador, were not to he emlwaced within the continuance of the powers to- lease; and that the word “left” is not of the same import in the will as if the language were, “may he left by them., (the children,) at the period of their (the children’s) deaths, respectively.”

But, we think, this clause will not admit of this interpretation^ The participle left must have reference to and qualify the word with which it stands connected in the sentence, express or implied.. And here the persons designated as left are the children or descendants of any of hi3 ehildren, and the time of being left is so plainly expressed that no dou-ht can well arise or be entertained, viz : at the death of any of his said children. If the testator meant otherwise, and- intended to confine the time to his own .death, he-would not have resorted to phraseology so elaborate as that used by him, when the simple phrase of living at my death, would have at once conveyed his meaning. Big; own death* and the death of any of his children, ara %wo distinct events. He lias used language plainly and distinctly, as we think, to express the latter. Upon what rule of construction then-can it he applied to the former ?

The time or period, therefore, for continuing this trust or power to lease the hotel property may extend so as to embrace persons and lives not in esse at the time of the testator's death, — descendants born after that event.

If an estate he so limited as - by possibility to -extend beyond a life or lives in being at the time of its commencement, and twenty-one years and a fraction of a year (to cover the period of gestation) afterwards, during which time the property would he withdrawn from the market, or the power over the fee suspended, it is a perpetuity and void as against the policy of the law, which will not permit property to he inalienable for a longer period. The question whether an estate is a perpetuity, generally arises in cases in which a future contingent -estate or-executory devise is limited upon a fee, and if the contingency upon which the executory estate is to vest, is mot necessarily to happen within the time fixed by the rule as the legal boundary, then the precedent estate or-estates are denominated a perpetuity, and-the executory estate or devise fails for want of a legal estate to support it. In all such cases, to give effect to the limitation over, the contingency-mwsi happen within the time prescribed by the rule. If it ma¶ happen after that time, then the-preceding estate tends to a perpetuity, which the law abhors and forbids. The object of the rule is to prevent the tying up of property, real or personal, and rendering it inalienable longer than the period designated by it. For that time the power over the inheritance or absolute interest of property may he suspended, but no longer. Lewis on Perp., 164, 165. 4 Kent’s Comm., 267, 271. 1 H. & G., 116, Newton vs. Griffith, 7 H. & J., 236, Dallam vs. Dallam.

-In the case now under consideration, no question ispresented as to the future vesting of an executory estate, in order to determine the validity of the preceding one ; hut simply whether the trusts of the will require in their execution a longer period than that prescribed by the rule against perpetuities, and, therefore, render the property devised to the trustees inalienable during that time. If so, the law denounces the devise in trust as- a perpetuity, and declares it void.

We have already said, that such is the character of this devise; that the execution of the trusts for leasing the property and performing the duties enjoined upon the trustees is to cover a period beyond that allowed by law, during which time this hotel property, real and personal, is placed extra commercium; and that the devise in trust is therefore void.

If the trust be void, then the power to lease, which is blended with it, as in this case, must be void also. It is not a mere power distinct from the trust, leaving the act to be done at the will of the party to whom it sis given, but it is mixed and blended with the trust, and its execution is as imperative as the trust itself. This distinction is well marked and to be observed. 2 Sugden on Powers, 158, In this case, the power is the trust, and the trust is the power. They cannot be separated, and any exceptions to the application of the rule, in cases of mere powers to sell or lease, do not apply to a case like this. The general principle is, that every power, the direct object of which is to create a perpetuity, is absolutely void. Lew. on Perp., 486, and cases there cited. The exceptions to the rule, then, arise out of the distinction between general and limited or special powers. But in every ease, the execution of the power, being distinct from the power itself, must conform to the requisition of the rule against perpetuities, or run the hazard of being avoided. And where a power is itself valid, in not transgressing the rule, the donee,- in executing it, may go beyond the proper boundary. Equity in such case, being guided by the power, will treat the excess as surplusage and void, but only where the portion which exceeds the boundary of perpetuity be definite and ascertained, or can be rendered so. But Mr. Lewis, in bis work, p. 494, adds, “that if the limitation under the power be read as inserted in the deed creating the power, ( which he elsewhere observes to be the true rule by which to determine the validity of the limitation itself,) it is evident, that where a part of the appointment fails for excess, the whole must he involved in its fate, because such failure implies that all the interests created were not so given as necessarily to vest within the perpetuity line ; and where-ever such is the character of direct original limitations, they are wholly void for remoteness, notwithstanding actual events might enable some, or even all of them, to take effect within the required period.” In the case under consideration, the limitation is in the instrument itself creating the trust or power, and no one can declare with certainty how the dispositions of the testator would have been regulated if he had been aware, at the time, of his inability to extend them to some included in his gifts. The whole is therefore vitiated by the excess. This is strengthened when we consider that this trust was created as a resource for his family, and to this end for permanently conducting the property as a hotel, the testator’s idea of his family being itself a matter of much controversy and doubt.

These views may sufficiently dispose of that part of the argument, on behalf of the appellees, which labored to extricate the trust in this case from the effects of the perpetuity rule, on the ground that it did not apply to powers exercised as in this case, or if so, that the trusts would he declared good in equity, pro tanto, or to the extent of the rale.

The trusts being void in toto, we regard the legacies springing out of them to be void also. The power to lease being void, the right to share in the distribution of the rents, the fruits of the exercise of .the power, must necessarily fail. Coster vs. Lorillard, 14 Wend., 265, et seq. It is needless, therefore, here to inquire what estates the children of the testator took in these rents, under the phraseology of the will, so much discussed in the argument as bearing upon the testator’s intention in the perpetuity clause, or as rendering the estates of the cestui que trusts free from its obnoxious effect, regarding them as fee-simple, equitable interests and alienable at the pleasure of those entitled.

If the clauses already referred to and analyzed with the residuary clause, constituted the -entire will, thé devise of the trust being void, the testator would be held to have died intestate of his hotel property. It would not pass by the residuary clause, under the rulings of this Court, in the case of Tongue vs. Nutwell, 13 Md. Rep., 416.

But there is another and important clause or article in Mr. Barnum’s will which is yet to be considered, and under which the complainants, the appellants, claim in this case. The testator’s intention in that article is to be inquired into and effect given to it consistently with the rules of law»

Upon its construction and effect this Court do not entirely agree, as they have concurred in the preceding part of this opinion. A majority of the Court, however, have, after a careful examination of the second article in connexion with all the other portions of the instrument, arrived at the conclusion that the testator intended by it an alternative provision in case his views expressed in the first article should be disappointed by any cause which would lead to a sale of the City Hotel buildings or grounds in the lifetime of any of his children. The language of the article is: “should my views in (he above first article of this luid be *disappointed, so that judicially or otherwise- a sale shall take place of said City Hotel buildings and grounds during the life of any of my children, it is my toill, and 1 direct that my trustees, or any Court of Equity, shall cause the proceeds of sale to be invested in mortgage or in ground rents,” &c.

It is apparent from the other parts of his will, that the testator’s principal object was a family settlement in regard to the main and favorite pari of his estate, The various and complicated provisions of the instrument, constituting almost its entire contents, are devoted to this purpose. He devised a mode for perpetuating it and for working out through its means a provision for the liquidation of his debts, and the support of his family through all the generations of his descendants, and providing for a correspondent continuation of the trust beyond the lives of those named as trustees in the will, by his executors and administrators cum testamento annexo to be appointed.

Although the third and other articles of the will stand necessarily in connexion with the first, it is the first that embodies the main features of the settlement. It names the trustees, the period of the trust, the cestui que trusts, the trusts themselves, with other guards and provisions for their safe and continued execution. His views may therefore be said to be contained in the first article, though in fact the other articles also embrace portions of them.

It was contended by the counsel of the appellees, with plausibility and force, that this second article was not intended to go into operation unless a sale of the buildings and grounds of the hotel should judicially or otherwise take place against the testator’s will, and not until and after such a sale had taken place, and as a condition precedent, and that his motive in introducing it was in terrorem to prevent the destruction of the trust by any of his children, who in such event should receive only life estates in the proceeds. And as no such sale has taken place, the clans© itself is and remains inoperative, and the bill of the complainants has been prematurely filed ; that the contingency or event upon which another and different disposition of the property is to take effect has not happened, and therefore no rights under it have accrued or can be asserted.

The testator might reasonably be supposed to provide some mode for securing a cherished plan, and rendering it completely operative. But if this were the motive for the insertion of the second article, why hold the rod over his children, when grandchildren, descendants of a deceased child, might effect the same interruption, tempted too by the absolute possession and enjoyment of the proceeds of sale?

It is impossible to say what was the governing motive of the testator in inserting this second article. He may as reasonably, if not more so, have looked forward to a probable sale of the hotel, during, the life of some one of his children, five in number, even if he was not aware that he had violated the rule against perpetuities, and thereby rendered the first article void and inoperative. He owed debts for which the urgent demands of creditors might render a mortgage of the hotel expedient, a prior plan ; for the proceeds of the country seat were to be postponed to this. A mortgage effected might in time be pressed to a foreclosure or sale. The stockholders might determine upon a sale of the property to pay the certificates of stock. Other events might occur to render a sale necessary, and therefore the word otherwise was introduced to embrace any kind of sale. But inasmuch as the testator, in this article, looks only to a sale of the realty, the hotel buildings and grounds, omitting all notice whatever of the personalty, the furniture and chattels, (no small portion in value or amount of the property devised in trust in so large and extensive an establishment,) the inference is strong, if not irresistible, that he had in contemplation a probable sale resulting from a failure of the first article by reason of Its invalidity. In such, an event, the personal property would be applicable to his debts without any special provision for that purpose. The establishment could no longer be conducted as a hotel upon his proposed plan, and as a support for his family ; and the next best thing, looking to a sure provision for not only his children, but their children and descendants, he directs the investment of the proceeds of the sale of the buildings and grounds in mortgage, ground-rents, United States or city of Baltimore stocks, for the benefit of his children during their lives, (subject to one-third of the income of the investment to his wife during her life,) and after their death to be the property of their respective children or descendants per stirpes; the children of such of his children as shall have died before the investment, taking as their absolute property and per stirpes, the shares to which, if they had lived, the deceased children would have been entitled.

If the first article should prove inoperative by the rules of law, and the testator apprehended it, what more likely than to provide in his will a substitute or alternative disposition of the estate. The presumption is, that making a will, he did not design to die intestate of any portion of his property, particularly of that which constituted his principal estate, and whieh he was seemingly so careful to dispose of for the benefit of his family and creditors. In doing so he would not likely ground his bequests upon an actual precedent sale as a condition, when a state of things might arise leading to a sale, or proceedings be instituted that would result in one. In either or any of these events, his views, as contained in the first article, would be equally disappointed.

It is to be noted, too, that the testator speaks in the future tense, “a sale shall take plaee,” not in the second future, “a sale shall have taken place.” The meaning is the same as if he had said, “so that judicially or otherwise a sale is to take place.”

If the theory of the appellees he correct, and any of the cestui qm trusts in the first article, taking an equitable estate in fee, in the premises, should sell his interest, (. as. has been done in this case,) and then a- sale of the hotel-buildings and grounds should take place in the lifetime of some of the children, for a cause other than that of the invalidity of the trust in the first article, how could the testator’s directions, as to the investment of the fund, take place for the life of.the children, and after their death* absolutely to their descendants ? This conflict can only be reconciled upon the ground that the children and other-legatees were to take life estates in-the rents under the first and third articles, and that they had no disposable owner-, ship in the property itself. If the .testator’s views in the first article should then he disappointed,, and a sale taka place, his intentions as to the proceeds-could then-he carried out under the second, in which life estates are expressly given to all the children, with remainders-to the grandchildren or descendants per stirpes-.

Equity treats as done that which ought to be done. If,, upon the failure of the first article, parties became entitled' to the proceeds of sale when effected, they would' have aright to resort to a Court of Equity for a sale which would produce those proceeds.. In substance,, the will is the same as if it directed a sale-to take place in ease the views in the first article could not be carried out, and it would seem the testator supposed' that the trustees would have the power to make the sale. What else could 'he have meant by the language: “1 direct my trustees or any Court of Equity shall cause the proceeds to he invested,” &c., agreeing with the previous branch of the sentence, “so that judicially or otherwise, a sale shall take place?” A sale by the trustees would not be a judicial sale, as would be one under ■¡an order or decree of a Court of Equity, which could only be obtained after proceedings instituted and conducted for the purpose.

( Decided December 21st, 1866.)

But we must not be understood as saying that the trustees have the power to make the sale under this will, as the testator has failed to use language- sufficient, in our ..judgment, to confer it.

The first clause of the will of the testator being void, and his purposes therein declared having been disappointed, the second -clause -becomes operative, and the complainants are entitled to relief. It, therefore, follows, that the Court below erred in dismissing the hill. The decree appealed from will therefore he reversed, and the causa remanded for further proceedings; the costs in this Court -and the Court below to be paid out of the trust fund.

Decree revet sed and cause remanded.

Note. — This cause was heard before the full Court, but the opinion was not filed ‘smtil after the death of Justice Cociiran ; he however concurred, in consultation^ 'vith the views of the majority. Bowie, C. J., dissented,,

Case Details

Case Name: Barnum v. Barnum

Court Name: Court of Appeals of Maryland

Date Published: Dec 21, 1866

Citation: 26 Md. 119

Court Abbreviation: Md.