Smith v. Darby, 39 Md. 268

Smith v. Darby

39 Md. 268 | Md. | 1874

G-kason, J.,

delivered the opinion of the Court.

The object of this suit is to enforce a trust against the executors of John McKee, which, it is alleged, was created by him in his life-time, in favor of the three infant children of his son Leander McKee.

The proof shows that Leander, before and at the time of his death, was indebted to his father in the sum of four thousand dollars, and that John McKee had repeatedly expressed the intention not to collect that sum from Leander, but to secure it to his, Leander’s children. After Leander’s death, John McKee had some correspondence and frequent conversations with William M. McDowell, who was the agent of Leander’s administratrix in the settlement of his estate, in relation to the sum thus due him, and the best method of investing it for the children, and it was finally determined that the money should be lent to McDowell; the loan was accordingly made to him; the evidences of Leander’s indebtedness were delivered up to McDowell to be cancelled, and *277the latter executed and delivered to John McKee the note or single bill, a copy of which is set out in the record. This note was drawn at the request and under the direction of John McKee, and was executed and delivered to him on the seventeenth day of April, 1866. It appears that this note was taken up by the substitution of another note of McDowell for the same amount, dated October 19th, 1867, and made payable to “ John McKee, or order.”

It farther appears that John McKee became uneasy about" the safety of the investment, and that in January 1868, he wrote to McDowell requesting security or payment. McDowell had offered to have his life insured for five thousand dollars and to transfer the policy to John McKee as collateral security for the loan to him. This was declined, and nearly the whole sum was paid to John McKee in his life-time, and the small balance then remaining, was paid to bis executors after his death. It also appears that John McKee, by his will, bequeathed the sum of six thousand dollars to Leander’s children.

In the argument of the case three questions were presented for our consideration ; first, was there a valid trust created by John McKee in favor of Leander’s children of this sum of four thousand dollars ? second, was the bequest of six thousand dollars to those children by John McKee’s will a satisfaction of the trust, and third, if the trust is valid and not satisfied, what interest ought to be allowed on the trust fund against John McKee’s estate?

First. It is a well established principle that a parol declaration of a trust of personal estate is sufficient. This was admitted in the argument ; but it was contended that in this case no trust had been completed, so as to be capable of being enforced, because John McKee had not signed his name to the single bill executed to him by

McDowell; had retained possession of it, instead of delivering it to the children, or to some person for them, and had never given them notice of the trust. The note was *278prepared at the instance and under the instructions of John McKee for the express purpose of securing the payment of the money for the use of the children, and by its very terms the money was to be paid to him as trustee for the children, aDd he,.well knowing its contents,- accepted it from McDowell. . By so doing he constituted himself trustee for the children, of the money, for which the note was given, as fully and completely as if he had signed a written declaration of the trust.

It was not necessary to the validity of the trust that he should have signed his name to the note, or notified the children of the existence of the trust, or have delivered the note to them, or to some person for them. Pye, Ex parte. Dubost, Ex parte, 18 Ves., 145; Cox vs. Sprigg, 6 Md., 284; Gardner vs. Merritt, 32 Md., 84; Wheatley vs. Purr, 1 Keen, 558.

If John McKee had designed to revoke the trust at the time he took the note payable to himself or order, in the place of the single bill which was payable to him as trustee for the children, his object could not have been effected, for when a trust is once created it cannot be revoked. This principle is too well established to need any citation of authorities in its support. But the proof shows that he had no such design, for he always spoke of it as the children’s money, and evinced great solicitude as well as an unwavering intention to have it safely invested for their use and benefit, and declined taking the life-policy as security, because he was apprehensive that the children might be delayed in receiving their money until after McDowell’s death. The letter in which he declines to takes the policy as security, speaks of the money as belonging to the children, and is dated 6th January, 1868, long after the date of the note, which was given in place of 'the single bill. It is therefore evident that John McKee had not the power, and never entertained a design to annul the trust.

*279Second But it was contended that the bequest by the will of John McKee to these children of a sura greater than that, which was secured by the note, was in satisfaction of the four thousand dollars. When a party is under a legal or moral obligation to do an act, and does that by will which is capable of being considered as a performance or satisfaction of the obligation, the law raises the presumption that the provision by will is in satisfaction of the obligation. But this presumption never arises except in the case of parent and child, or one standing in loco parentis, and to prevent double portions which are not favored by the Courts. There is nothing, however, either in the note which John McKee took from McDowell, or in the letters he wrote, both before and after the date of the note, which indicates any intention upon his part to stand in the place of a father to these children. On the contrary they furnish the strongest evidence of his intention merely to invest a sum of money for their benefit, to accumulate by the reinvestment of the interest until the eldest of the children should arrive at age, when the amount was to be paid over to them. It was not intended for their maintenance or education, for he expressly declared that their father’s estate was sufficient for those purposes. Neither of the children ever lived with him, but their mother married a second time and removed with them to the State of New Jersey.

No presumption, therefore, arises in this case that the bequest was a satisfaction of the trust created in favor of the children. But even if such a presumption did arise, it is rebutted by the proof in the cause; for in speaking of the investment of the four thousand dollars for the children, he told McDowell that he also intended to provide for them in his will.

Third. In the case of Ringgold vs. Ringgold, 1 H. & G., 79, 80, it was held, that where a trustee was directed to invest and reinvest dividends or interest, or, in other *280words, where the trust directed an accumulation, and the trustee used the funds, or employed them in his business, compound interest should be allowed. This allowance is founded upon the ground of the gain, or presumed gain made by the use of the funds ; but when the circumstances forbid a presumption of gain, compound interest will not be allowed. As there is no evidence in this case to show that John McKee used the trust funds, or employed them in his business or in any other mode by which he could have made gains, but failed in the performance of his trust only in respect of reinvestments, upon the case of Ringgold vs. Ringgold, we are of opinion that simple interest only should be allowed upon the trust funds, and that the Court below erred in allowing compound interest. Eor this cause the decree appealed from will be reversed and the cause remanded in order'that an account may be stated in conformity with the views expressed in this opinion.

[Decided 21st January, 1874.]

Decree affirmed in part and reversed in part, and cause remanded for further proceedings.