Johns Hopkins University v. Middleton

Alvey, C. J., delivered the opinion of the Court. The bill in this case was filed by the executors and trustees under the will of the late Lambert Gittings against the Johns Hopkins University, to obtain a decree for the specific performance of a contract of sale and purchase of two adjoining warehouses, in the City of Baltimore, sold by the trustees to the University, as part of the undivided estate of Lambert Gittings, the testator. The sale was formally and properly made at public auction, and was evidenced by writing, and the payment of $1000 as a deposit by the purchaser. There is no question or doubt made or suggested as to the sufficiency of the title of the testator, or as to the fairness of the sale by the trustees. But a question is raised by the purchaser as to the existence of power or authority of the trustees to make a valid sale of the property under the will of the testator, in the events that have occurred since the date of the will. The property is valuable, the price bid therefor being $60,800; and these two adjoining warehouses were offered and sold by the trustees for the purpose of enabling them to make division of the estate of the deceased among the devisees and legatees, according to the direction of the will. Mr. Gittings, the testator, made his will in 1810, and died in July, 1881. He left surviving him two married daughters with children, and three granddaughters, the children of a deceased daughter, and which granddaughters were also married and had children. The will of the testator was the subject of judicial construction by this Court, in the case of Dulany, et al. vs. Middleton, et al., 72 Md., 67; and to that proceeding — 200 — the executors and trustees, and the two daughters with their husbands and children, and the three granddaughters with their husbands and children, were all parties— the bill being filed by the executors and trustees against the other parties as defendants, for the purpose of obtaining a judicial construction of the will, and to have determined the extent of the powers of the trustees. The estate of the testator was large, and consisted of real and personal property of various descriptions, and this entire estate he devised and bequeathed to three trustees (who were also named as executors) and the survivors or survivor of them, their heirs and assigns, to hold the estate to the uses and upon the trusts expressed in the will. He directs his debts and funeral expenses to he paid, and certain amounts to be paid out as legacies, and $10,000 to he invested to raise certain annuities, the principal of which sum to revert to his estate. He-then directs that the trustees shall hold in trust the entire residue of his estate and property, together with the reversion of the sum set apart to raise annuities, and that they shall first divide the whole of such estate devised' in trust, into three equal parts, having reference to the value of each part. Provision is then made for the allotment of the parts, one part to each of the two surviving daughters, Mrs. Middleton and Mrs. Buchanan, and one part to the three granddaughters, representing-their deceased mother, Mrs. Simons; and this latter one( third part to he sub-divided into three equal parts, and one of the parts of such sub-division to be allotted to each of the three grandchildren in severalty. These several parts allotted to the two daughters and the three granddaughters the testator declared should he held “to the-separate irse and benefit of his said two daughters and three granddaughters respectively, according to the parts chosen by them, as the same shall be allotted in the before-mentioned division, free from any control of any present — 201 — or future husband, for the term of their natural lives, the annual product or avails thereof to go and inure to his' aforesaid daughters, and granddaughters Simons respectively, and after each of their deaths respectively, the share of each to be held by his trustees as aforesaid, to the use of the children of his aforesaid daughters and granddaughters, and their heirs, executors and administrators.” If this limitation to the separate use of the granddaughters had been left unaffected by subsequent provisions of the will, there could have been no question of the continuance of the trust in respect of the shares of the granddaughters during their respective lives. But, by the last clause of the will, the duration of the trust, as to the shares of these granddaughters, is expressly limited to the period when such granddaughters would attain the age of thirty years; from which time it is declared the trust shall cease and determine. That is to say, to quote the language employed in the last clause of the will, the trust “shall cease and determine in the case of each grandchild upon and as she reaches the age of thirty, so far as regards her share coming either directly from me or from her mother’s proportion of my estate, and that such grandchildren or grandchild from that period and age (thirty) shall hold their respective shares, or her share, free and discharged of the said trust, to themselves for the term of their natural lives respectively, and after their deaths to the lawful issue of their bodies, their heirs and assigns forever; and the said trustees shall convey the shares of such grandchildren to them in accordance with this direction of my will.” Before, however, there could be an extinguishment of the trust pro tanto and a transfer of the respective shares to the granddaughters, or to either of them, as directed by the will, it was a necessary prerequisite that all legacies and charges upon the estate should have been paid — 202 — and satisfied, and that there should have been a division and allotment of the estate, real and personal, among and to the devisees and legatees, as specially provided for and directed by the will. And to this end, ample powers were conferred upon the trustees. After directing the manner of dividing the estate into shares, and allotting the same to those entitled as cestuis que trust, the testator declared that it was his will and intention that his trustees should have power and authority to sell any part of his estate, real or personal: — First, to pay debts and legacies; second, to change investments, or to convert unsafe and unproductive stocks, and other personal or real estate; and third, if necessary or advisable, for the purpose of an equitable and satisfactory division of his estate, between his two daughters, Mrs. Middleton and Mrs. Buchanan, and bis three granddaughters, the daughters of Mrs. Simons, deceased; and that the trustees should have like power in the case of and for the purpose of the sub-division as among his three granddaughters. It was in the supposed or intended exercise of this power of sale for the pm-pose of division of the estate, that the sale was made by the trustees to the present appellant. It is alleged in the bill, and not denied by the defendant, that the residuary real estate of the testator is still undivided. It is admitted that Mrs. Eleanor A. Dulany, one of the three granddaughters entitled under the will, attained the age of thirty years before the death of the testator; and that Mrs. Louisa Gillett, another of those granddaughters, attained the age of thirty years in January, 1891. But it is alleged and insisted by the trustees in this case, that these facts in regard to the age of the granddaughters are wholly immaterial as regards the duty of the trustees to make division of the entire estate; and that their power, to that end, to sell the indivisible warehouse property, and any other real estate — 203 — which, in their best judgment, should be sold, to enable them to make a just and satisfactory division of the estate, according to the intention of the testator, as expressed in his will, is clear beyond doubt. The trustees also insist that the question of their power to sell the warehouses, as part of the residuary estate of the testator, to be divided among the cesiuis que trust, is concluded by the opinion and decree of this Court, affirming the decree of the Court below in that respect, in the case of Dulany, et al. vs. Middleton, et al., already referred to, reported in 72 Md., 67. The defendant, by its answer, takes the position that the trust, as to the interest or share of Mrs. Dulany in the residue of the estate of her grandfather, never attached or had operation, because of the fact that she had attained the age of thirty years before the testator’s death ; and that the trust ceased to have operation, as to Mrs. Gillett’s share or interest in the estate, immediately upon her attaining the age of thirty years, though she attained such age after the death of the testator. In the answer, the objection is stated thus: That the power of sale for the purpose of division of the whole residue of the estate which was given by the will, was conferred upon the trustees as trustees only, and that such power ceased as to any and all portions of the whole residue of the estate, which were discharged from said trust on the arrival of any one or more of the cestuis que trust at the designated age of thirty years; and that it is matter of doubt to the defendant whether a trust, which was intended to operate upon the whole residue of such estate in its entirety, did not cease to have any operation when it could no longer operate upon such whole residue in its entirety. In the case of Dulany, et al. vs. Middleton, et al., supra, the fact that Mrs. Dulany had attained the age of thirty years before the death of the testator, did not appear in — 204 — the record, and the fact was in no manner brought to the attention of the Court; and, of course, the decision of the case was not made with reference to any such fact. The question of the existence of the power of sale, however, was distinctly raised by the bill; and all the facts charged in the bill were admitted by Mrs. Dulany and her husband, as they were by all the other adult defendants; and they all submitted to such decree as the Court might think right to pass. It did not occur to any one in that case to suggest the question that is now raised by the present defendant. And without stopping to discuss the proposition, whether the opinion and final decree in that case, affirming the existence of the power of the trustees to make sale of the real estate of the testator for purposes of division, should be regarded as having concluded the question, we are clearly of opinion, that the facts now brought to the attention of the Court, as to the ages of the two granddaughters, can in no way, under the facts of the case, operate to defeat or extinguish the power of sale. And this power of sale is not a mere naked power in the trustees, hut is coupled with the legal estate vested in them, and its exercise operates with reference to the shares or interest of each and all of the devisees and legatees entitled to take shares of the general residue of the estate, and that without regard to the fact that one of the granddaughters of the testator may have attained the age of thirty years before his death. It is certainly clear that such devisees and legatees can only take their respective shares upon division and allotment of the estate, as directed by the will. Division must precede allotment. No one or more of such devisees can select any particular piece or parcel of property, constituting a part of the general residue, and demand a transfer or conveyance of it, though the period or event for the cessation of the trust has occurred, as — 205 — to such devisee. The entire legal estate is in the trustees, and it must remain there, to serve the purposes of the trust, until the primary duties prescribed by the will, and the execution of the testamentary scheme of the testator, are performed by the trustees. They may be compelled to execute the trust in accordance with the direction of the will; but until division and allotment be made, as the will directs, the main and principal duties imposed upon the trustees remain to be performed; and it is only through the performance of these dirties that the devisees are entitled to the possession and control of their separate and ascertained shares. And, therefore, if it be necessary or advisable in the judgment of the trustees, for the purpose of an equitable and satisfactory division of the estate, that the power of sale should be exercised, in respect to the property in question, clearly, the exercise of the power is fully authorized, as well by the terms as by the general plan of disposition of the testator’s estate. To hold otherwise would be to- frustrate the manifest intention of the testator, and destroy the most prominent feature in his will. It is unquestionably true, as a general principle, that if a power be given to trustees to be exercised during the continuance of the trust, such power cannot be exercised after the time when the trust has in fact, by specific limitation, been terminated, even though, from the delay of the trustees, it has happened that the trust has not been completely executed. But it is equally well settled, that if the trust continues as to part of the property, as it unquestionably does in this case, though it may, by the terms of the instrument creating it, have ceased as to part, the power will remain in force, and can be exercised over the whole, for the benefit of all concerned, unless there is a clear and imperative direction to the contrary. This is the principle of the case of Trower vs. Knightley, 6 Madd., 134, a decision by Sir — 206 — John Leach, Vice-Chancellor. In that case there Was an estate devised in trust for two'daughters in moieties for life, with remainders in each moiety for their children at twenty-one years of age, and a power of sale was given to the trustees, to he executed during the continuance of the trust; and one daughter having died and her children attained the age of twenty-one, and the trust therefore having determined as to their share, the Vice-Chancellor, nevertheless held that the trustees had power to sell the'whole estate, under the terms of the devise; it being necessary that the trustees should have the right to sell the whole estate, in order to preserve the trust for the full benefit of those entitled to the other half of the trust property. The principle of that case has been adopted and followed in several subsequent cases in the English Chancery; as in the case of Taite vs. Swinstead, 26 Beav., 525, and that of Cotton’s Trustees and The School Board for London, 19 Chan. Div., 624. See 2 Perry on Trusts, sec. 498. And this same principle was fully recognized as established by Lord Chancellor Cottenham, in his elaborate judgment in the case of Wood vs. White, 4 My. & Cr., 460, though the facts of that case did not require its application. All the cases applying the principle proceed upon the simple ground that the trust powers are necessary to be preserved in order to give effect to the plain and manifest intention of the testator, and to avoid defeating a settled and well defined plan for disposing of his estate. We entertain no doubt of the continued existence of the power of sale over the entire property sold to the appellant, nor of the right of the trustees to exercise it; and therefore the decree of the Court below should be affirmed. None but the trustees and the purchaser are parties to this case. But it would seem to be well settled that there is no necessity or propriety, according to English — 207 — precedent and decision, for making the two granddaughters and their husband and children parties. They were not parties to the contract of sale, and no decree would be passed against them; and the decisions are express to the effect, that to an ordinary bill for the specific performance of a contract of sale, the parties to the contract are the only proper parties to he brought before the Court. Wood vs. White, 4 Myl. & Cr., 460; Robertson vs. The Great Western Railway Co., 10 Sim., 314; Taite vs. Swinstead, 26 Beav., 525; Cotton’s Trustees and The School Board for London, 19 Ch. Div., 624. In this case there is no exception taken to the bill by the defendant for want of proper parties. (Decided 8th June, 1892.) Decree affirmed.