Carey v. Reed

Removal of Executor — Misconduct—Jurisdiction of Orphans' Court. The Orphans’ Court has jurisdiction to remove an executor for unfaithful or incompetent administration of the estate. A few weeks after returning his first inventory of the estate, an executor filed a corrected or amended inventory, in which he charged himself with less than one-half of the amount returned in the first inventory. At the time of filing the second inventory the executor had hypothecated half of the assets to banks as security for loans made to him on his individual account. The will had relieved the executor from the necessity of giving bond. Upon a petition of parties interested, setting forth that the assets of the estate were in danger of being wasted and misappropriated, the Orphans’ Court passed an order requiring the executor to furnish a substantial bond for the due performance of his duties within one week. The executor did not comply with the order, but filed an answer denying the authority of the Court. Held, that the Court had jurisdiction to revoke the letters testamentary upon proof of the allegations of the petition.

Appeal from an order of the Orphans’ Court of Baltimore City revoking the letters testamentary on the estate of Anna Reed, granted to the appellant, Carey. The will was offered for probate on or about March 14, 1895. On or about June 11, 1895, the executor returned his inventory of personal estate, under oath, showing that it amounted to $38,960.30, and an inventory of real estate, consisting of one lot of ground and improvements in Baltitimore City, valued at $11,000. On July 5, 1895, Charles J. Cary (the executor), made an assignment for the benefit of his creditors to William J. O’Brien. On the next day, July 6, 1895, the said executor, by leave of Court, returned an amended inventory in which he states as follows: “ In the original inventory filed in this estate on the nth of June of this year, certain securities were included which were not the property of deceased, and for the purpose of correcting said error this amended inventory is returned.” And he then enumerates coupon bonds and stocks and cash amounting to $15,462.46, and swears that it is a true and perfect inventory of all and singular the goods and chattels of the said deceased, &c. On July 22, 1895, the appellees filed their petition in said Court, in said matter, stating that they were legatees under the said will; that the appellant was named as executor, and that he was acting as such with merely nominal bond. „ That the testatrix was old and inexperienced in business matters, and that the appellant had married her niece and adopted daughter, who was deceased; that he had lived with the testatrix for many years, acting as her confidential agent under a power or powers of attorney ; that her property consisted largely of chattels, personal, amounting to about $ 150,000; that immediately after her death the appellant stated to one of the petitioners that her estate would amount to between $ 120,000 and $ 130,000; that notwithstanding, the appellant returned to the said Court the inventories hereinbefore referred to and afterwards the said amended inventory; that the appellant was insolvent or pretended to be, and had recently made a deed of trust for the benefit of his creditors, and that he had made use of the property of the testatrix and squandered it in speculations. And the petitioners prayed that he might be required to give new security in an adequate amount, by a definite time, and failing to do so, that he should be removed and an administrator with the will annexed appointed. Thereupon, on July 22d, 1895, the said Court ordered that the appellant give a new bond, in penalty of $75,000, within a week ; provided a copy of the order should be left at his place of business or served on him within three days; and that unless he should give said bond within said period, his letters should be revoked. The copy was served on the appellant on the same day. On the same day the appellees also filed another petition in the matter, in which they made substantially the same allegation, and alleged that they had reason to believe that the appellant was concealing a part at least of the said testatrix’s property, and had not lost it, and that they were apprehensive that more might be lost unless it was withdrawn from his possession, and prayed that he might be required to bring into Court the securities and money mentioned in the amended inventory, &c. On the same day the Court ordered that he do so on or before July 25th, 1895. In appellant’s answer he denied the jurisdiction of the Orphans’ Court to pass the orders asked for. He admitted that at the time of making her will the property of the testatrix amounted to $87,000, but alleged that before her death she had giveii away a large part of it, so that the true amount remaining was shown by the second inventory. He also admitted that “ he first filed an inventory of per sonalty to the amount of thirty-three thousand five hundred dollars, and that afterwards he filed an amended or corrected inventory of said estate valued at fourteen thousand nine hundred and fifty dollars, and in explanation thereof, he says that well knowing that the legacies mentioned in the will of said deceased amounted to about thirty-seven thousand five hundred dollars, and that, at the time of the making of said will the testatrix desired that said legacies should be fully paid out of her estate, and also well knowing that the amount of the estate of the deceased at the time of her death was not sufficient to pay the same, and inasmuch as he was a debtor to said estate to the amount of said deficiency, he made a return of personal estate which he thought would be sufficient to fully pay said legacies, determining in good faith to make up the deficiency out of his private estate at a time when it would be necessary for him by law to pay said legacies. That he took such action and filed said inventory without consultation with counsel or any other person, and actuated by what he conceived to be just and right motives, but that afterwards, on' consultation with counsel, and having revealed to counsel the exact condition of his private affairs and of the estate of the testatrix, he' was advised that in law he could not make up such deficiency for the payment of said legatees to the detriment and loss of his own creditors, as he was insolvent and unable to pay his debts in full, and therefore he was advised that it was necessary and proper for him to make and return the corrected inventory filed in this Court, which he avers is a true and exact statement of all of the personal estate of the deceased of which he has any knowledge whatsoever.” On August 8,1895, appellant filed a supplemental answer to the last mentioned petition, wherein he reiterated his denials of the jurisdiction of the Court, but tendered himself ready to surrender over to the Register all the personal estate of the testatrix, mentioned in the amended inventory. On the same day, the date having been previously fixed, the Court proceeded to take testimony of witnesses, and to a hearing of the matter of the petitions and answers. There were three witnesses — the appellees, Henry C. Reed and Samuel T. Reed, and the appellant, who testified on his own offer, in his own behalf. Henry C. Reed testified that the morning after Miss Anna Reed’s — the testatrix’s — funeral, he was walking down Charles street with .Samuel T. Reed, and they met the appellant. That the witness asked appellant if he had formed any estimate ,of the amount of testatrix’s estate, and that appellant replied that he had, and it would amount to between $120,000 and $130,000. That witness then asked appellant what Reed Cary’s (the residuary legatee’s) share would be, and he replied, about $80,000 —and that the legacies amounted to about $40,000 — but that he, appellant, did not propose to report to the Orphans’ Court more than sufficient to cover the legacies and cost of administration, as he did not propose that Reed should pay collateral inheritance and other taxes. That witness then asked appellant whether he did not know that when he went into Orphans’ Court he would have to report under oath the entire estate, to which appellant replied, “ that was all right.” It was shown that a few years before her death the testatrix had inherited $153,000. Appellant was sworn, and testified that he filed the amended inventory, under advice of his counsel, after having obtained leave to do so from the Court. That nine of the bonds included in the amended inventory were not in his possession, but that they had been hypothecated by him with the Eutaw and Provident Savings Banks for loans to him amounting to $8,000, before the death of testatrix; that the accounts given by Henry C.' Reed and Samuel T. Reed, of the statements made by him to them, regarding amount of testatrix’s estate, were correct; that he had made that statement to mislead the appellee, Henry C. Reed, because he knew Henry C. Reed was unfriendly to him, and the estate was in such a condition that appellant could not make a full return as he (Reed) would expect, and that the statement was not a correct one. That he returned the first inventory because he knew testatrix desired the legacies to be paid, and he expected to purchase them out of his own estate, and that the amended inventory contained the exact statement of what she had at her death, after deducting the amount loaned against said bonds. The Orphans’ Court subsequently filed an opinion and order setting forth that Henry C. Reed, H. Clay Reed and Samuel T. Reed, nephews of Ann Reed, deceased, and legatees under her will, had petitioned the Court to require Charles J. Cary, executor of said will, to give new security sufficient to cover the interests of all parties entitled to the estate ; said petitioners alleging that the executor had given only a nominal bond under the Act of i860, as amended by the Act of 1882. The petitioners relied upon section 41 of Article 93 of the Code of Public General Laws, which provides that only a bond for the payment of debts shall be required of an executor when it is so requested in the will, but also provides, that “ whenever any heir, distributee, legatee or devisee named in a will shall make it appear to the Orphans’ Court that any executor who has given such bond only * * is wasting the assets of the estate, or that the assets of the estate in the hands of such executor are in danger of being lost, wasted or misappropriated, then, and in that case, the Court shall require the said executor to give bond with security in a penalty sufficient to secure the interests of the heirs, distributees, legatees and devisees, and conditioned accordingly; and on his failure to give bond as required by the Court, within a time named by order of Court, his letters testamentary shall be revoked forthwith.” The Orphans’ Court held that the evidence showed that the executor had been guilty of improper acts and that therefore they would not require him to give additional bond for the security of the estate, but would remove him from office and appoint an administrator de bonis non cum testamento annexo with authority to recover the assets wasted or concealed. The order of the Court concluded as follows : “ The executor giving notice of his intention to appeal the case on this order, it is further the opinion of the Court that he be required to give bond for at least $>50,000 to protect the estate during the pendency of the appeal. It is therefore ordered and decreed, this 9th day of August, 1895, that the letters of the executor be revoked and that on appeal he be required to give bond to protect the estate during the pendency of the appeal in the penalty of $100,000.” 1. The Orphans’ Court has no jurisdiction or authority to hold the appellant responsible for any waste, expenditure or loss of any part of the estate of Anna Reed during her lifetime, even if there was anything in the record to show that he had acted unlawfully; whereas the contrary is fully sustained, both by the answers and the evidence of Charles J, Cary, i. e., that all the expenditures of the estate made by him for his personal use and benefit were made with her approval and authority. 2. There is no evidence of loss of any part of the estate after the death of the testatrix. 3. There is no evidence of concealment — charges made in the petitions filed by the appellees are not proof. 4. There is no evidence of any danger of loss or waste of the estate, the executor having tendered himself ready to deposit the entire personal estate with the Register, and having in fact done so. 5. The Orphans’ Court had no jurisdiction or authority to. require any further bond of the executor after he had deposited the entire estate with the Register of Wills, except such as might be required to cover a loss of the collections of rent and interest. 6. On the evidence presented, the Orphans’ Court could not have required the executor to file any additional bond. 7. The act of the executor in filing the original inventory of personal estate was unquestionably foolish, and, although it was a false inventory in fact, it was not in any sense fraudulent, because it included all the estate in his hands. 8. The order and decree of the Orphans’ Court was improvidently passed; first, because there was nothing in the evidence to justify such an order; and second, because the Court had no jurisdiction to remove the executor. Code, Art. 93, secs. 41, 277, 52, 53, 34; Bhunenthal v. Moitz, 76 Md. 566; Levering v. Levering, 64 Md. 410. The conduct of the appellant, after letters testamentary were committed to him, in returning to the Court two false inventories, was a flagrant contempt of the Orphans’ Court, and though its jurisdiction is limited, it had a right to punish and to “ make the punishment fit the crime,” by removing him altogether as unworthy of the confidence of the Court. Every Court necessarily possesses inherent control over its own officers, independent of any specific statutory authority. 1 American and English Enc. of Law, page 944, sec. 3; In re Goodrich, 79 Ill. 153 (middle;) Penobscot, &c. v. Kimble, 64 Me. 146 (top.) And though an executor derives his authority from the will, he must obtain his letters testamentary from the Court, and the Court is entitled to judge of his fitness before committing letters to him. No one could doubt that if the unfitness of the party named as an executor were shown before letters were committed to him, the Court would refuse to issue them, and in withholding them’, it would be doing no violence to the intention of the testator, for it must be presumed that the testator would not have named a person known to him to be unfit. If the Court possesses the power to withhold letters testamentary from a person shown before they are granted to be unfit, on what principle can it- be contended that after they have been committed to him and the Court has become satisfied of his unfitness, it is powerless to revoke them ? Furthermore, the Orphans’ Courts have a general power to require new security to be approved by them to be given. (Article 90, section 2.) And under it, the Orphans’ Court of Baltimore City had jurisdiction to pass the order of July 22, 1895. ‘ By fixing a day for compliance with the order the Court gave him an opportunity to do what the appellees had a right to require should be done; but the appellant did not comply with this order, but was in default, and to excuse compliance with it, he offered evidence which showed conclusively that it would have been an injustice to the legatees to have given him any further opportunity to wipe out the default and comply with the order. Under these circumstances, the Court was justified in acting upon the default and removing him. Moreover the Court had express power under Article 93, sections 41, 237 and 230, to revoke the letters.