Clark v. Callahan

The bill in this case was filed by the appellant against the appellees to procure an accounting from one of the appellees, Edith B. Callahan, for one-half the proceeds of certain benefit certificates received by her, and for an injunction against the said Edith B. Callahan, and the other appellee, Edward J. Callahan, her husband, restraining them from conveying away or disposing of a certain house and lot in Baltimore alleged to have been purchased by the said Edith B. Callahan partly with a portion of the proceeds of said certificates, and to be the only tangible property owned by her. It appears in the evidence that the plaintiff, when about twelve years of age, was taken into the family of Col. Charles W. Raphun of Baltimore, a relative on her mother's side, and that she resided there until his death in February, 1903, when she was about nineteen years of age, being maintained and cared for by him as if she were his child, and that he always expressed and evinced a strong affection for her. Col. Raphun was at the time of his death an official in the office of the Collector of the Port of Baltimore, and was a man of small means, but held a benefit certificate for two thousand dollars in the Ancient Order of United Workmen, and another for three thousand dollars in the Improved Order of Heptasophs, both payable at his death. These certificates were originally payable to his second wife, Estelle V. Raphun, from whom he was separated about six months before his death, she having filed a bill for divorce, which was pending when he died. After this separation, on June 5th, 1902, he surrendered the original certificates, and new certificates were issued in which Mrs. Callahan was by his direction named as the beneficiary Col. Raphun had three children, one daughter, Mrs. Callahan, by his first wife, who was married in 1899, and thereafter did not live with her father, and two sons one of whom resided in Chicago, and the other was under twenty-one and lived at home. The bill alleged that about the time of the separation, Col. Raphun declared his intention to have his said daughter and the plaintiff substituted as joint beneficiaries under said benefit certificates, so that the proceeds thereof upon his death should be paid to them in equal shares, but found that this could be done because under the rules of said associations, only blood relatives of members could be made beneficiaries; and that thereupon, after consulting his daughter, and obtaining from her a solemn promise that the proceeds of said certificates, should be equally divided between herself and the plaintiff when paid, he caused his said daughter to be made the beneficiary of said certificates in the place of his wife, upon the express trust and condition that said daughter should share said proceeds equally with the plaintiff, and that said trust was accepted by his daughter upon such condition. Soon after Col. Raphun's death, his wife brought a suit in replevin against Mrs. Callahan, and also an action of slander, and claimed to be entitled to the proceeds of said benefit certificates. In May, 1904, while these litigated matters were pending, including interpleader proceedings between Mrs. Raphun and Mrs. Callahan as to their respective rights in the proceeds of said benefit certificates, Mrs. Callahan, as the bill alleges, without the knowledge or consent of the plaintiff, compromised all the pending litigations between her stepmother and herself by payment to her out of the proceeds of said benefit certificates, of the sum of $1,500, and the payment of certain costs and expenses attending said litigations, amounting to $774.91, and leaving a net amount coming to her from said certificates of $2,725.09.

The defendants answered the plaintiff's bill denying all the material allegations, and specifically denying that any promise was ever made by Mrs. Callahan to pay any part of the proceeds of said certificates to the plaintiff, or that the name of Mrs. Callahan was substituted as beneficiary therein upon any trust or condition whatever; denying that she accepted any trust whatever, and alleging (under oath) that she could not have done so, because she was not aware until after her father's death that she was named as beneficiary in said certificates. The answer admitted the compromise above mentioned, but alleged that it was made with plaintiff's knowledge, and alleged that the plaintiff was largely the cause of the slander suit mentioned. Testimony was taken by both parties, and after hearing and argument, the Court, being of opinion that no valid trust was created by Col. Raphun in the said benefit certificates, the plaintiff's bill was dismissed, and this appeal is taken from that decree.

Before considering the principal question in the case we will advert to the exclusion of certain testimony which was offered by the plaintiff. The depositions of Mr. and Mrs. Stiles, residents of West Virginia, and of Mrs. Dooley, the mother of the plaintiff, a resident of Virginia, were taken before a notary of those respective States in the manner provided by section 17 of Article 35 of the Maryland Code, after five days notice to the opposite party. When it was proposed to read these depositions, the defendants objected, and on their motion the depositions were excluded or suppressed. The principal objection made was that this method of taking the testimony of non-resident witnesses, not parties to the cause, is only available in Courts of law, and that the only method of taking the testimony of such non-resident witnesses in Courts of equity, is under a commission issued from the Court under its own rules, but it was also contended that as section 241 of Article 16 requires evidence taken and returned to be opened by the clerk, and to remain in Court ten days subject to exception, before the cause shall be taken up for hearing, unless, by agreement of the parties, such time shall be waived, and as in this case the testimony had only laid in Court five days, and there was no waiver of time when the cause was taken up for hearing, the depositions were properly excluded.

Sections sixteen and seventeen of Article 35 should be read together, and so read (unqualified by any other provision of law in pari materia), section 17 must be regarded as applying only to the Courts mentioned in section 16, that is Courts of law, notwitstanding the broader language of section 17. In Goodman v. Wineland, 61 Md. 456, it was held that the provisions of section 16, were not applicable to non-resident parties, except in the discretion of the Court upon satisfactory proof of permanent inability to attend the Court in person. But section 18 of Article 35 (chapter 399 of 1898), provides that "the testimony of non-resident parties to a cause, may be taken, whether in their own behalf or by the opposite party, in the same manner as the testimony of other non-resident witnesses; this to apply to Courts of law and equity, and to proceedings before magistrates." The defendants contend that as these witnesses are not parties, that section cannot affect the question; but we cannot agree to this. If that were the case, non-resident parties would be put in a better position than other non-resident witnesses, and this can hardly be supposed to have been the purpose of the law makers. We think the purpose was to do away with all discrimination, in this respect, between non-resident parties, and other non-resident witnesses, and also to permit the taking of the testimony of any witnesses in Courts of equity as well as in Courts of law, under any method open to non-resident witnesses not parties to the cause. The words used in section 18, "in the same manner as the testimony of other non-resident witnesses," must be taken not only to mean that parties are to have the same privileges as other witnesses, but also that other witnesses are to have the same privileges as parties, both in Courts of law and equity.

Nor do we think the fact that these depositions had not laid in Court ten days warranted their exclusion. The law does not forbid reading the depositions in such case. It forbids that the case be taken up for hearing without a waiver of such time. The proper course was to object to the taking up of the case, and consent to take it up should be held to operate as an implied waiver of time. In Clogg v. McDaniel, 89 Md. 419, it was held that irregularities in the execution of a commission which might justify the suppression of the evidence if availed of at a proper time and in the proper manner, would not be allowed to prevail "if sprung at a time when it would be impossible to retake the depositions before the case has been fixed and taken up for hearing," and the rule is so laid down in Miller's Eq. Proc., sec. 219. We think these depositions should not have been excluded.

We have carefully read and considered all the testimony, and it amply sustains all the material averments of fact contained in the bill. Col. Raphun told Mrs. Stiles in September before his death that the plaintiff had nursed him faithfully; that she had always been as a daughter to him, and that hers was the only care he had in his illness; that he had meant to adopt her, but had put it off too long, but that he had amply provided for her, and he told Mr. Stiles subsequently that he had made the same provision for her as for his own daughter. Mr. and Mrs. Stiles were the adopted parents of the plaintiff's younger sister, which explains their interest in the plaintiff.

The plaintiff herself testified that she lived seven years in Col. Raphun's family, going there at twelve years of age; that Mrs. Callahan married about four years before her father's death, and against his consent, which produced an estrangement for a time, though there was a reconciliation later, and that Mrs. Callahan did not live in her father's home after her marriage, but came there one month before his death and remained until he died; that in the summer before his death he told plaintiff in Mrs. Callahan's presence upon the steps of their dwelling, that he had transferred the certificates to his daughter upon condition that she should share the proceeds equally with plaintiff, and that Mrs. Callahan said she would observe his wishes; and that on a later occasion he repeated this statement and Mrs. Callahan said, "Yes, papa, I will do just as you wish."

Mrs. Dooley testified that three or four days before Col. Raphun's death, she heard Mrs. Callahan promise him she would divide the insurance with Agnes.

The plaintiff testified that Col. Raphun said he had made the transfer of the certificates before he told his daughter in her presence of the condition upon which the transfer was made, but Mr. Studebaker testified that Col. Raphun discussed the proposed transfer with him several times before it was made, and then said it was to be made to his daughter upon condition that Agnes should receive one-half the proceeds, and afterwards told him he had made the change and had carried out his previously declared intention. He also testified that in December, 1902, or January, 1903, Col. Raphun referred to the transfer of these certificates, and said that Edith, his daughter, understood the conditions upon which they were changed, and she replied, "Papa, don't worry about that, your wishes or the conditions will be carried out fully."

Mrs. Callahan denied that her father ever mentioned Agnes in any way to her in connection with these certificates, and said she had never known or heard that the certificates had been put in her name until after her father's death, when her husband, three or four hours after her father's death, took them from his papers at the Custom House, and handed them to her. On cross-examination she admitted her father had told her they had been put in her name, and when asked whether the conversation upon the steps of the dwelling testified to by the plaintiff had occurred, her only reply was that she did not remember it. She denied ever seeing Mr. Studebaker in her father's house, or that she had ever spoken to or with him, but both Mrs. Studebaker and Mary Dooley, a sister of plaintiff, testified that she was personally acquainted with Mr. Studebaker, and named two occasions when she was engaged in conversation with him, and plaintiff testified that Mr. Studebaker was a frequent visitor of Col. Raphun during his illness, and that in January, 1903, he was in the sick room conversing with him, and that Mrs. Callahan was in the room during the visit, none of which testimony was denied or contradicted by Mrs. Callahan. In March, 1904, while the litigation before mentioned with Mrs. Raphun was pending, and while the plaintiff was with Mrs. Stiles in West Virginia, she wrote Agnes, "if I had that insurance, I do believe I would spendall my share of it to fight her, that is the way I feel; if anything else turns up I will let you know." When confronted with this letter, and asked what she meant by her share, she said she meant all; that she knew the meaning of the word share, but she meant the share was all hers, though she knew that a share was less than all. There is not a particle of evidence that the plaintiff was in any way interested in the litigation referred to as the replevin and slander suits, though of course indirectly interested in the certificates, and there is no evidence that she ever assented to or knew of any proposed compromise of any litigation.

The first and only reference to a compromise is made in JUDGE SAMS letter of May 24th, 1904, to plaintiff stating that "the four cases had been compromised after careful deliberation, for the reasons that litigation is more or less uncertain and Mrs. Callahan was far from well," and adding, "I am authorized to send you on the part of Mrs. Callahan $700 as a present." When plaintiff under advice of Mrs. Stiles, being without means to conduct litigation away from home, or at all, determined to accept the $700, Mrs. Callahan promptly reducedthe gift to $500, which plaintiff refused and instituted these proceedings.

From this review of the testimony we cannot hesitate to hold that the averments of fact upon which the plaintiff relies to sustain her claim have been fully made out, and that the compromise made by Mrs. Callahan of the litigation with Mrs. Raphun, was made without the knowledge or consent of the plaintiff and constitutes no defense to her claim.

The controlling question in the case however, is whether in transferring these certificates to Mrs. Callahan, Col. Raphun created a valid trust in favor of the plaintiff as to one-half of the proceeds of these certificates.

In Smith v. Darby, 39 Md. 277, it is said, "It is a well established principle that a parol declaration of a trust of personal estate is sufficient."

In Hill on Trustees, p. 101, it is said, "Any expression manifesting an intention that the donee of property is not to have the beneficial enjoyment of the whole, or some part of it, will be binding on the conscience of the trustee, and will in equity effectually exclude any claim by him to the beneficial interest. For this purpose, it is by no means necessary that the donee should be expressly directed to hold the property to certain `uses,' or in `trust,' or `as trustee.' It is one of the fixed rules of equitable construction, that there is no magic in particular words; and any expressions that show unequivocally the intention of the parties to create a trust, will have the same effect."

In the Casualty Ins. Cos. case, 82 Md. 560, this Court has said, "In determining whether or not a trust has been created, Courts will take into consideration the situation and relations of the parties, the character of the property and the purpose which the settlor had in view in making the declaration. No technical terms or expressions are needed. It is sufficient if the language used shows that the settlor intended to create a trust, and clearly points out the property, the beneficiary, and the disposition to be made of the property."

In Reiff v. Horst, 52 Md. 256, Horst received from Eshleman $400 as a gift, and not as a loan or trust, and eleven years thereafter got $2,000 more, not as a loan but to be held in trust for his children, and then for the first time it was agreed and understood that the $400 previously given should also be treated and held in trust the same as the $2,000, and it was held that a trust was impressed upon the $400, because "there was no uncertainty in the subject matter or object of the trust, nothing optional or indecisive."

To the same effect are Milholland v. Whalen, 89 Md. 214, and Snader v. Slingluff, 95 Md. 366, "Nor is a trust rendered void by the appointment of a beneficiary as trustee."Milholland v. Whalen, supra, 218.

We do not understand the principles announced in the cases cited, to be questioned seriously by the defendant, but it was contended by her that according to the plaintiff's own testimony she had no knowledge of the creation of the alleged trust until after the certificates had been transferred to Mrs. Callahan, and the argument assumed, as a consequence, that the settlor had effectually parted with the dominion over the property before the declaration of any trust, and that after the property had vested in Mrs. Callahan, it was then too late to fasten a trust upon the property. It is true that the plaintiff had no knowledge of the creation of any trust until after the certificates were transferred, but it was not necessary to the validity of the trust that she should have such knowledge. It is only necessary that the donee should have knowledge of the intention of the settlor to create the trust, in order to fasten the trust upon the conscience of the donee. We think upon all the testimony in the case, that the proof is clear and satisfactory that the trust was declared at or before the time of the transfer of the certificates and that it was made known then to Mrs. Callahan. She denies this, it is true, but her testimony is so weakened by its numerous contradictory and inconsistent statements that little reliance can be placed either in its accuracy or probative force. Moreover Mr. Studebaker said that Col. Raphun "in numerous conversations" with him told him that he intended to transfer the certificates to Mrs. Callahan "upon the condition that Agnes Dooley should receive one-half of the amount of the policies." Mrs. Callahan after first testifying in chief, and also swearing in her answer, that she did not know the certificates were in her name until after her father's death, in the next question but one, said, "My father said: `Edith, I have changed the name from Mrs. Raphun, my wife, to your name, and you are my daughter and you are to have these policies.'" We are not called on to assume that though Col. Raphun repeatedly declared his intention to create this trust, and after the transfer of the certificates, several times in the presence of at least two different persons, reminded Mrs. Callahan of the terms of the trust, he yet neglected and failed to declare to her at or before the transfer, the conditions upon which he had so deliberately determined and so clearly declared to others. Such an assumption would be contrary to all the inherent probabilities of the situation, and would be to shut our eyes to inferences as strong and clear as any that control the actions and conduct of practical men in all the affairs of life. But there is another and equally satisfactory answer to this position of the defendant. This is not a case where absolute dominion over the subject of the trust is parted with by the donor. Where an absolute and unconditional gift of money or property is made, and subsequently the donor attempts to impress a trust upon the subject of the gift, it might be conceded the attempt would be futile. Here, after the transfer of these certificates to Mrs. Callahan's name, Col. Raphun retained the possession of them up to the moment of his death, and he had the same power and right, at any time, without the consent of his daughter, to return them to the Taxation-Orders, and obtain other certificates, naming other beneficiaries, that he exercised when he surrendered the original certificates in the name of his wife, and obtained those in the name of his daughter. If it were conceded then, that Mrs. Callahan was substituted as beneficiary without the creation of any trust in the proceeds thereof at or before that time, and the trust wassubsequently declared by him, and accepted or assented to by Mrs. Callahan as established by the testimony of Mr. Studebaker, Mrs. Dooley and the plaintiff herself, can it be doubted that Col. Raphun could and would have revoked the substitution of Mrs. Callahan if she had, either at the time of the attempt to create the trust, declined to execute it, or having assented thereto, subsequently informed him she would not execute it? Can she now, after securing to herself the fruits of these certificates by repeated assurances that she would carry out her father's directions to share the proceeds with the plaintiff be permitted, to repudiate her promises after his death, and thus defraud both the dead and the living? We think not. In Hirsh v. Auer, 29 N Y Supp. 917, a case almost identical with the present, the Court adverted to the revocable character of the interest of a beneficiary under such a certificate, and intimated strongly the view we have expressed, and that case was affirmed on all points in 146 N.Y. 17. Such conduct as Mrs. Callahan's, even assuming that the creation of the trust was subsequent to her substitution as beneficiary, constitutes fraud, and gives jurisdiction to equity to defeat its consummation. By assenting to her father's wishes and directions she led him to make no other disposition in favor of the plaintiff, and fastened upon her own conscience a trust or confidence which she cannot repudiate without fraud, and which a Court of Equity will enforce. The principles involved in this view are well illustrated in Hirsh v. Auer, supra, inHooper v. Holmes, 11 N.J. Eq. 122; Williams v. Vreeland,32 N.J. Eq. 736, and in Dowd v. Tucker, 41 Conn. 197, and inO'Hara v. Dudley, 95 N.Y. 403.

We therefore hold there was error in dismissing the plaintiff's bill, and that she is entitled to an accounting and a decree inpersonam against Mrs. Callahan for one-half of the amount of said certificates less such credits as are allowed according to the accounting we shall direct.

It appears from Exhibit No. 1 filed with the plaintiff's bill and from the testimony of Mr. Wm. C. Smith, counsel for Mrs. Raphun, in all the litigation mentioned by him, that there were four separate cases. 1st. The divorce case of Raphun v.Raphun. 2nd. The case of Raphun v. Callahan Dooley, andLingenfelder, as Ext. of Col. Raphun, a bill in equity to set aside the substitution of Mrs. Callahan as beneficiary named in the certificates. 3rd. The replevin case of Mrs. Raphun against Mrs. Callahan, and 4th, the slander suit of Mrs. Raphun against Mrs. Callahan. It also appears from Exhibit No. 1 that fees were allowed by the Court, amounting to $128.30 out of the proceeds of the certificates paid into Court. The plaintiff was interested equally with Mrs. Callahan in defeating the proceeding of Mrs. Raphun to set aside the substitution of Mrs. Callahan as beneficiary and it is therefore proper that she should be charged with one-half of the fees allowed in procuring payment into Court of the proceeds of these certificates, and of whatever costs were paid, or are properly chargeable to the defendants, in the bill to set aside the substitution of Mrs. Callahan as beneficiary. But the plaintiff was in no manner interested in the result of the litigation either in the divorce case, the replevin case, or the slander case, and she is not chargeable with any part of the costs in these cases.

Mrs. Callahan also paid Mrs. Raphun a lump sum of $1,500 in compromise and settlement of all these cases. The plaintiff was only interested in the certificate case, and though she was not consulted at all about any compromise, we think she should bear some part of the $1,500 as the consideration for settling the certificate case. The divorce case was terminated by Col. Raphun's death, and the plaintiff had no possible interest in the result of that case nor in the replevin case, which is not shown to have been of much importance to any one, and it may be reasonably assumed that the greater part, if not the whole of this $1,500 was paid to settle the certificate suit and the suit for slander, and that one-half of that sum may be apportioned to each of these cases. The plaintiff was equally interested with Mrs. Callahan in the former, but had no interest in the latter, and upon that basis she should be charged with one-fourth of $1,500, viz, $375.

It also appears from Exhibit No. 1 that fees, in addition to those allowed for payment of the certificate money into Court, were paid amounting to $500, and if upon investigation these fees are found to be reasonable and proper in amount and to have been paid as the $1,500 was in a lump sum for professional services in settling the certificate and slander cases, the plaintiff ought also to be charged with one-fourth of that item. She should also be charged with $70, which she testified she received from Mrs. Callahan after Col. Raphun's death, and which presumably was paid in anticipation of her half of the proceeds of the certificates as it was paid before Mrs. Callahan had repudiated the trust. The net balance ascertained upon such accounting should bear interest from May 25th, 1904, when Mrs. Callahan received the proceeds of the certificates from the Clerk of the Court, and offered the plaintiff a present of $700.

As the evidence shows that the house, No. 1822 West North avenue, Baltimore City, is held by Mr. and Mrs. Callahan as tenants in common, the decree to be passed on the accounting directed should be a personal decree against her for the sum found to be due, and inasmuch as she has testified that she has in her possession two bonds of the Anacostia and Potomac R.W. Co. for $1,000 each, purchased with the proceeds of these certificates, and $500 cash in bank derived from the same source, all representing and constituting part of the trust fund, the Circuit Court should order her forthwith to bring said bonds and cash into Court to await the result of the accounting ordered.

Decree reversed, and cause remanded for further proceedings inconformity with the views herein expressed. The appellees to paythe costs above and below.