Hyatt v. Vanneck

Devise and Legacy — Election by Devisee — Obligation of Beneficiary Under a Will. A party cannot claim a benefit under a will and at the same time defeat its provisions, and hence, where a testator gives to one devisee property in which another has an interest, the latter cannot take what is devised to him and at the same time what is devised to the former, although but for the will it would be his. A testator gave to his daughter property which he knew to be hers with a limitation over in favor of others, and in the residuary clause he mixed her property with his own and gave to her one-half. Held, that the devisee was put to an election to determine whether she would claim her own property or would take the devises and bequests in the will. A. was life-tenant of certain real estate, the remainder in fee being in his daughter. She united with him in a conveyance of the property for $25,000. The proceeds were received by A. with his daughter’s consent. He invested $6,ooo thereof in a house and the balance in ground rents and bonds, all in his own name. He subsequently married and conveyed the said house to his wife. By his will he devised the ground rents to his daughter with a limitation over in the event of her death without issue, and the balance of his estate was divided by the residuary clause between his wife and daughter. The latter obtained a decree against the former for $6, ooo, which was paid. The daughter then filed a bill claiming that she was entitled to receive from? the testator’s estate the whole amount for which the property in which she had the remainder was sold, less $6,ooo already paid. Held, thatj|there being no fraud or concealment on the part of the testator in dealing with the money received from said sale, and his intention being manifest that his daughter should have from his estate only the provision made for her by the will, she was bound to elect to claim either the ground rents and bonds or to take the devises andjlegacies given her by the will.

Appeal from a decree of Circuit Court No. 2, of Baltimore City (Wickes, J.), by which it was adjudged that the executors of the estate of Edward Hyatt should pay to the appellee the sum claimed by her to be due from said estate. The facts appear in the opinion of the Court. The following devises and bequests were made by the will of Hyatt: (i.) An annuity of $250 to a certain Annie Kelly for her life, with remainder equally to Amy H. Van-neck and Charlotte Hyatt. (2.) Five ground rents to Amy H. Vanneck, with a proviso that if he should die leaving no issue or descendant surviving her, then the ground rents should go to other parties, as declared in the second clause of the will. (3.) Certain articles to Amy H. Vanneck, contained in his dwelling No. 16 W. Franklin street. (4.) All the other household and kitchen furniture to Charlotte Hyatt. (5.) Sixty-seven shares of stock of the Sherwood Distilling Company to John H. Wight, in trust, as to 50 shares thereof, for the use and benefit of Charlotte Hyatt, and as to the remaining 17 shares thereof, for the use and benefit of Amy H. Vanneck; none of the stock during the period of 10 years from the date of his death to be sold except by the joint assent and transfer of John H. Wight, trustee, and Charlotte Hyatt or Amy H. Vanneck, respectively, as the case might be. In his will he states that his reason for giving Charlotte Hyatt 50 shares and Amy H. Vanneck only 17, was that he had already given Amy 33 shares, and he desired to equalize their holdings. (6.) All the money due him by the Sherwood Distilling Company to his wife, Charlotte Hyatt, and his daughter; Amy H. Vanneck, to be divided equally between them; the said money, however, to be allowed to remain in the hands of the company at interest, and not to be withdrawn from it without its consent, for the period of 10 years after his death. (7.) All the rest and residue of his property to his wife Charlotte and his daughter Amy, equally to be divided between them. Mrs. Vanneck under the well-known and long-established law of “election,” must choose between two courses, viz.: Either yield to the will absolutely and take what her father gives her of his property, ratifying his disposition of what was rightfully hers ; or else claim what belonged to her in spite of his will, and surrender an equal value of his property bequeathed to her, for the compensation of those legatees or devisees to whom her property had been given by her father’s will. She cannot claim under the will, and at the same time defeat its provisions as to others; she must adopt it in toto, or else renounce her rights under it. If she desires to accept what her father gave her by his will, she must release all claim to any property of hers that he has given thereby to any other person, wholly or partially, and all claims against his estate that would defeat or impair the testamentary intention evidenced by that will. Without quoting the language of the cases, we cite, in support of this doctrine: Waters v. Howard, 1 Md. Chancery, 112; McElfresh v. Schley, 2 Gill, 202; Whitridge v. Parkhurst, 20 Md. 87; Barbour v. Mitchell, 40 Md. 159; 2 Williams on Exors. (last ed.) 767—8. But the appellee argues that she is not claiming these ground rents and bonds against her father’s will, but allows the disposition of them to stand as the will prescribes ; and is claiming the money that bought them, that Mr. Hyatt paid for them, as a common debt due by him to her. Does this any the less defeat her father’s intention ? Does this any the less break up and impair the scheme of equality between his wife and daughter, which is the corner-stone of the will from top to bottom ? The general intent of the will, which is the one to be gratified, is that, so far as the testator could control the disposition, his wife and his daughter should be equal in worldly goods. The appellee is seeking to defeat this intention, and to obtain the interests devised and bequeathed to her in the ground rents and bonds, as well as all other benefits derived under her father’s will, and, at the same time, to make the estate pay tp her the whole purchase price of these securities. We submit this position is untenable in a Court of Chancery. Edward Hyatt was not a trustee for his daughter; he was a life-tenant in possession, and she the remainderman. And if he had been a trustee he has committed no act — no fraudulent, or- immoral or unlawful act — which the law would condemn, or for which it would punish him pecuniarily as a man guilty of a violation of his trust relation. To say that his depositing the $25,000 in bank to his credit was an unlawful act or breach of trust, is absurd. To say that his investing $5,000 in coupon bonds, passing by delivery, was unlawful or a breach of duty is absurd. And to hold that the mere failure to insert Mrs. Vanneck’s name in the deeds for the ground rents along with his own was fraudulent or a breach of trust is equally without foundation or reason, when we remember that she was his only child, to whom lie bequeathed soon afterward half his large estate, worth ten times the value of the rents. How is it possible to impute moral wrong or evil intent in such a case ? And it is as a punishment for such misconduct alone that equity ever submits — even a technical trustee — to the burden of the kind of “ election ” which the appellee invokes for her relief here. That is, the election or option on the part of a cestui qtie trust when his trustee has spent, squandered or invested trust funds in violation of law or his duty, to take the investment, if worth more than the money put into it, or to decline the investment, throw it on the trustee’s hands, and hold him personally responsible for the money if the investment depreciates in value. Equity never puts a man in this “ heads I win tails you lose ” position except as a reward for malfeasance. The discussion or argument of the appellee on the law of ademption or satisfaction of debts by legacies has no relevancy to this case. Mrs. Vanneck is not and never was a creditor of her father’s, and hence we do not claim that any legacy under his will adeems any debt due her. There is none to adeem; although if there were, our learned opponent’s theory that Edelen v. Dent, Owings v. Owings, and such cases, would deny the ademption or satisfaction of an ordinary debt by such legacies as Mrs. Vanneck received, might possibly be correct. Just now he is firing in the air. The rule that a legacy from a debtor to a creditor is presumed to be in payment of the debt is looked upon with disfavor by the Courts, and advantage is taken of slight circumstances to overthrow it. Edelen v. Dent, 2 G. & J. 191; Story on Eq. Jur. sec. 1122. So it has been decided that no presumption of payment arises when a particular motive is assigned for the gift, or where the legacy is of the same amount as that given to other legatees (Story Eq. Jur., sec. 1122; 23 Gratt. 93), or the legacy is of less amount than the debt (1 Harris & Gill, 491; 12 Mass. 391), or is contingent or uncertain (2 Gill & Johnson, 191 and 192; 1 Green Chan., 1), or of a different nature, either as to subject-matter or interest (1 Harris & Gill, 491; 2 H. & J. 63; 62 Pa. St. 192; 12 Mass. 391-394; Story, Eq. Jur., sec. 1122; 53 N. Y.; 1 Green's Chan. 1), or where there is a difference in the time of payment of the debt and the legacy (2 G. & J. 192), or where the bequest is of the whole or part of the residue (2 G. &. J. 192.) So, also, if the ground of the indebtedness is a breach of trust to which- the testator was a party, no presumption of satisfaction arises from the fact that he has bequeathed a legacy to the cestui que trust. (Smith v. Lyne, 2 Y. & C. C. 345 and 350.) Applying the rules of law just enumerated, none of the -provisions of the will in question operate as a payment of the debt. The first provision does not so operate because the legacy is of less amount than the debt; there is a difference as to the time of payment, and the legacy is of the same amount as that given to another legatee. The second provision does not so operate, because the legacy and debt ■are of a different nature, both as to subject-matter and interest. The third provision does not so operate, because the legacy and debt are of a different nature as to subject-matter. The fifth provision does not so operate, because the legacy and debt are a different nature as to interest; the legacy is of less amount than the debt and a particular motive for the gift is assigned. The sixth provision does not so operate, because the debt and legacy are of a different nature as to interest; the legacy is of the same amount as that given to another legatee; there is a difference as to the time of payment of the debt and legacy, and the legacy is contingent and uncertain. The seventh provision does not so operate because .the bequest is of a part of the residue, is contingent and uncertain, and the legacy is of the same amount as that given to another legatee. In addition to all this, as the debt was created by a breach of trust on the part of the testator, the rule of law as to the satisfaction of a debt by a legacy does not apply at all. Mrs. Hyatt took ground in her answer, first: That the devises and bequests in the will were a satisfaction in law of Mrs. Vanneck’s claim, and next, that if not such satisfaction, she could not claim the ground rents and the coupon bonds, in the purchase of which Mr. Hyatt expended nearly the whole of this nineteen thousand dollars without abandoning her right to take the devises and bequests made in her favor in the will. In reply to this defence, Mrs. Van-neck does not claim the ground rents as hers, nor the coupon bonds as hers, by reason of their being held to be the representatives of the’money with which they were purchased, nor did she deny her father’s right to deal with the ground rents specifically as his, nor with the coupon bonds as a part of the residue of his estate, but conceding that the ground rents belonged to him, and that the coupon bonds also belonged to him, she acquiesced in the disposal made by him of the ground rents, and assumed that the bonds being his property, passed under the residuary clause of his will. She insists, however, that no one of the devises and bequests in the will, nor all of them combined operated as a satisfaction of her claim for the nineteen thousand dollars, and that having recognized her father’s right to treat the ground rents and coupon bonds as absolutely his and to deal with them accordingly, no case was presented either for the doctrine of election, or for the doctrine of satisfaction. In this case, the appellee has elected to hold the estate of her father liable for his breach of trust instead of attempting to follow the trust fund; and to be successful, in accordance with the law, as just stated, it is only necessaiy for her to show that a breach of trust has been actually committed. The admitted facts certainly conclusively prove such breach of trust. Edward Hyatt, the life-tenant, immediately on the receipt of the $25,000, on November 28, 1892, deposited the whole amount in the National Mechanics’ Bank in his own name individually. On December 8th he bought five one thousand dollar coupon bonds, which, as part of his personal estate at the time of his death, he bequeathed as his own property to his daughter and wife equally. On January 4, 1893, he invested $12,656.80 of the trust fund in five ground rents on Madison avenue and took the deeds in his own name, and these same ground rents he subsequently treated as his own, by bequeathing them specifically under his will. On December 20, 1892, he spent $4,000 of the trust fund in purchasing the ground rent on the property No. 16 West Franklin street, the leasehold interest in which he himself held, and took the deed in his own-name ; and after spending $2,000 more of the trust fund on January 25, 1893, in fixing up and improving 16 West Franklin street, he conveyed the whole property, as if it were his own absolutely, to his second wife, Charlotte Hyatt, the appellant in this case. How could .a breach of trust be more clearly shown ?