53 Md. 564 | Md. | 1880
delivered the opinion of the Court.
Joseph Johnson died in March, 1864, leaving a will by which, after some small bequests, he directed all the residue of his property to he divided into two equal parts, and then devised one part to trustees, in trust for his grand■son, Joseph J. Tyson, for life, with remainder to his chil
When the testator died, his grandson, Joseph J. Johnson was an infant and did not attain majoi’ity until October, 1815. In the meantime, proceedings in behalf of the infant were instituted in the Circuit Court of Baltimore City, under which that Court, as a Court of equity, assumed jurisdiction and control over the administration of' the trusts, and in April, 1869, passed an order requiring the trustees to give bond for the faithful performance of their duties, which they did. Afterwards, in 1810, 1811 and 1812, the trustees, with the consent or permission of the Insurance Company, transferred portions of this stock, amounting to 532 shares in all, and appropriated the proceeds to their own use. In October, 1814, but before discovery of these transfers, the trustees, upon petition of the-
The new trustees then, in March, 1876, filed the hill in the present case against the Insurance Company to recover the stock thus lost to the trust estate or its value. The hill charges that Simms and Tyson had transferred on the hooks of the company 532 shares of its stock, part of the 1069 standing in the name of Joseph Johnson, deceased, without the order of the equity Court, without the sanction or authority of the will under which they
The company in their answer admit the fact of the several transfers of the 532 shares but aver by way of defence: 1st. That after the arrival of the proper time for distribution of the testator’s estate, Simms as executor by the authority and with the assent of his co-executor, Tyson, distributed 417 of these shares to said Tyson as distributee thereof under the will, and that Simms and Tyson conjointly, after they had taken to themselves the stock as trustees for some reason unknown to defendants, but supposed by them to be proper and legitimate, transferred, 115.other shares to one Marean. 2nd. They deny that these transfers were illegally or fraudulently made so far as the defendants are concerned, or with any knowledge on their part that the same were in any way improper or unauthorized: they deny that they had any copy of the will or any knowledge of its contents, and aver that the transfers were permitted to be made by them in perfect good faith, fully confiding in the propriety and legality of the same and without notice of any sort to the contrary. 3rd. That even if Simms and Tyson did commit the frauds alleged, the complainants are in duty bound to exhaust their remedies upon the bond which these parties gave as trustees prior to any resort against the defendants, if any they have against them, which they do not admit. 4th. That the only parties damnified by these pretended breaches of trust are the legatees of the stock in remainder, who being designated as a class to take after the death of the respective tenants for life, cannot therefore be ascer
Afterwards by agreement Simms and Tyson, as executors and trustees were made defendants to the’ bill, and filed an answer in which they admit they made the transfers, but deny they did so with any fraudulent intent.
Testimony was then taken, but before the case was ready for hearing, Tyson died without leaving children or descendants, so that by the terms of the will the equitable interest in the whole 1069 shares of stock devolved upon the grandson, Joseph J. Johnson for life, with remainder to his children and their descendants if he should leave any, and if not, then over. Upon the. hearing the Court below passed a decree dismissing the bill, and from that decree this appeal is taken.
If the bill was filed under proper authority and with proper parties to it, and if the proof makes a case rendering the company liable, it seems to be well settled that a Court of equity has jurisdiction to enforce the liability. We need not review the many decisions cited in argument in support of this position. It is sufficient to say that the leading-authorities upon the subject, both in this country and in England sustain the jurisdiction of Courts of equity in such cases. In Perry on Trust, sec. 242, the learned author in treating of trusts by equitable construction, states as the result of the authorities in the United States that if a corporation that requires a transfer of its stock to be made by its own officers upon its own books, permits a transfer to be made by an executor, trustee or guardian, -of stock held by such persons in a fiduciary capacity, such corporation knowing the trust, and that the transfer is
But it has been argued that the complainants are seeking to make the Company responsible for breaches of trust committed by their predecessors, before they themselves had any legal existence or relation to the trust, and for which of course neither they nor their sureties are responsible, and that for this they have no legal competency merely as trustees, nor by virtue of the order of Court on which they rely; that the parties injured are the legatees, in remainder under the will, who alone are competent to sue, and for whom the Court had no authority in the previous case to substitute the trustees now suing; that the position of the complainants is precisely analogous to that, of administrators de bonis non, who accept by virtue of the statute, and within the limits which it prescribes, have no power to sue for the delinquencies or devastavils of their predecessors, nor has any Court, unless under special statute, the power to authorize them to sue for any violation of trust committed before their appointment, and that this is not because of their being administrators merely, but because of a nile and principle common to all classes of trusts alike, viz., that the injury done by the delinquent.
It is true an administrator de bonis non cannot in this State maintain an action for a devastavit committed by a deceased or displaced administrator, hut this doctrine is, we think, founded in reasons not applicable to the present case. Our laws, like those of most of the States, in relation to .such administrators, are founded upon the law of England as it was administered in the Ecclesiastical Courts. By these laws the administrator who is displaced, or the representative of a deceased administrator °or executor intestate, are required to a'ccount directly to the persons beneficially interested in the estate as distributees, legatees or creditors, and this accounting may he made or enforced in the Probate Court. The remedy for parties thus interested for any waste or misapplication of the effects of the deceased by his administrator or executor, is by an action at law on his administration bond. To the administrator de bonis non is committed only, the administration of the goods, chattels and credits of the deceased which remain in specie, and have not been “ already administered.” Our statute limits his authority to the administration of such assets as have not been “ converted into money, and not distributed and delivered or retained by the executor or former administrator, under the direction of the Orphans' Court.” In view of this law, and the source from which it was borrowed, money received by the administrator and mingled with his own, or other assets sold, wasted or misapplied or converted to his own use, are regarded, so far as the rights and power of the administrator de bonis non
But it is further argued that even if the present trustees are entitled to sue, still the bill is defective, because the
. The remaining inquiry is, have the complainants made ■out a case entitling them to relief against the defendant corporation ? The stock in question stood on the books of the company in the name of Joseph Johnson, the original owner from the time of his death until the alleged unauthorized transfers thereof, and in this respect the case differs from that of Albert and Wife vs. Savings Bank, 2 Md., 159. In that case the stock never belonged to the testator and never stood in his name, but was purchased by his executors after his death. Other facts established by the testimony are as follows : On the 18th of November, 1870, Simms and Tyson, as executors, transferred 115 ■shares of this stock standing in the name of Joseph Johnson to Joseph Johnson. Why stock thus standing in the name of the testator should be transferred by his executors to the testator himself does not appear. It was certainly a very unusual and extraordinary transaction, for on the same day the same parties as executors transferred the same shares to Charles Marean, who appears to have held them until the 23rd of March, 1871, when he transferred
The fact that Simms and Tyson in making these transfers professed to act as executors of Johnson, the deceased stockholder, gave the company, or its officers tó whom superintendence of transfers of its stock was committed,
The slightest inquiry' in the Orphans’ Court where the will was recorded, and where the law required the personal estate to he administered by the executors, would have disclosed the fact that the debts had lonjr before been paid and the estate settled up. Besides, in Lowry’s case where the hank was held liable, there was a similar state of facts as to the length of time after the death of the testator before the transfer was made, and like facility for ascertaining the true state of the case "on inquiry. Nor can the company, thus charged with knowledge of the contents of the will, he excused on the ground that they had the right to suppose the transfers were being made in due course of distribution. Under the will Tyson was not a distributee, nor a legatee for life and entitled as such to have the stock transferred to him in his individual name. He was merely a cestui que trust for life, and the dividends upon one-half of the stock during life was the only beneficial interest in it which the will gave him. Conjointly with Simms he was made a trustee to hold the legal title, and in no other capacity was he entitled to hold the stock for a single day after his duties as executor had been discharged. This appears so plainly on the face of the will, that no one reading it could have mistaken its meaning in this respect.
But it is said that when these transfers were made the stock had by operation of law been transferred from the executors to the same parties as trustees, and that they are to he regarded as having then held it in the latter capacity. Conceding this to he so, we do not see'how it can avail the company as a defence in this suit. It may be true that an innocent assignee for value under an assignment executed by these parties as executors, would have taken
It will be observed that in thus disposing of the case no reference is made to the Act of 1843, ch. 304, now constituting sec. 274, Art. 93 of the Code. By this omission we are not to he understood as intimating that a transfer by the administrator or executor, of stock in a bank or other corporation like the present defendant, belonging to and standing in the name of a deceased stockholder, is not a sale of the property of the decedent within the purview ■of that Act. We regard the liability of the company in this case as made out independently of the provisions of that statute, and for that reason have made no reference to it in determining that liability.
The company is not responsible for the dividends on the •stock that accrued after the transfers and before the death •of Tyson. These belonged to Tyson himself and the trust estate has no claim to them. The complainants are entitled to a decree compelling the company to replace the 532 shares on its books in their names as trustees and issue a proper certificate to them therefor and to pay them the dividends that have accrued thereon since the 5th of April, 1878, the date of Tyson’s death, or to pay them the market value of the several portions of stock at the respective dates of the several unauthorized transfers thereof by •Simms and Tyson and by Simms alone, together with the •amount of dividends that have been paid since Tyson’s death to other stockholders on the same number of shares. Telegraph Company vs. Davenport, 7 Otto, 369 ; Pollock vs. National Bank, 3 Selden, 274. To the end that such relief may be granted the complainants, the decree appealed from will be reversed and the cause remanded.
Decree reversed and cause remanded.