Opinion
Decided February 13th, 1906.
Power of Appointment — Creditor's Bill.
A was entitled to an equitable life estate in property with power to devise the same to such of his children as he might designate by last will, and in the event of his death without leaving children the property was to pass to the grand-children of the creator of the power. A died without issue and by his will attempted to dispose of the property. Held, that the creditors of A cannot subject the property to the payment of their debts.
Appeal from the Circuit Court for Baltimore County (FOWLER and BURKE, JJ.)
The cause was argued before McSHERRY, C.J., BRISCOE, PAGE, BOYD, PEARCE, SCHMUCKER and JONES, JJ.
D.G. McIntosh and D.G. McIntosh, Jr., for the appellants.
Z. Howard Isaac, for the appellees.
This appeal is from a decree of the lower Court sustaining a demurrer to the bill filed in the case and dismissing the proceeding.
The facts as stated in the bill are substantially as follows, viz.: William H. Goodwin was in his lifetime indebted unto Charlotte Price and Mary B. Price respectively, in the sums set out in the bill. He died possessed of some personal estate, not sufficient to discharge his debts and of the real estate here inafter set forth. He left a last will and testament, by which after certain devises, the residue of the estate was to be distributed equally among the children then living of John O. Price. By the will of Penelope D. Goodwin, the said real estate was devised to one Thomas Donaldson, in trust to pay the rents, issues and profits to her son, the said William H. Goodwin, during his life, and after his death in case the said William should marry and leave issue living, in trust for such children and in such proportion and interests as he should designate and appoint by last will and testament, and in case he died leaving no children or descendants living at the time of his death, then in trust for such grandchildren of the testatrix as should then be living, to be divided equally between them. Subsequently by a codicil to her will, she gave the trustees the title to the said property in fee subject to the said trusts with power to the trustee to sell and convey the same or any part thereof on such terms as he might deem proper, provided that any such sale should be in the lifetime of William and with his consent witnessed in writing. Subsequently David G. McIntosh by substitution under an order of the Court became the trustee under the will of Penelope Goodwin in the place of the trustee named in the will. The said property being unproductive and supplying no income, Charlotte Price the appellant with the consent and approval of the trustee, and upon the assurance she would be compensated therefor, took William H. Goodwin to board with her, and supported him from December, 1895, to February, 1902. Being without funds, a portion of the real estate was sold for taxes from time to time, and the said William H. Goodwin entered into an agreement with Charlotte Price and Colgate Price, that if they would advance the money to redeem the land so sold, the said Goodwin would execute a will and devise them a portion of the land; and in pursuance of the same the said Charlotte and Colgate Price did advance the money which was necessary to enable the trustee to redeem the land. Goodwin died without leaving widow or children. The prayer of the bill is that the personal estate may be applied in due course of administration in payment of the debts of the complainants, the appellants, c., and that the real estate or so much as may be required be sold for the payment of debts that may remain unsatisfied after the application of the personal estate, c.
The questions presented are: 1st, does a creditor's bill lie for the sale of the said real estate? and 2nd, can the agreements with Colgate and Charlotte Price be enforced by declaring them to be equitable liens upon the property?
There seems to be no question that William H. Goodwin under the will of Penelope Goodwin took an equitable life estate in the property with a power of appointment at his death. The appellant contends that "when a person has a general power of appointment over property, and actually exercises the power, whether by deed or will, the property appointed shall form a part of his assets, and be subject to the claims of creditors in preference to the claims of the appointee, and he cites in support of this doctrine several cases of which Johnson v. Cushing, 15 N.H. 298, is one of the clearest. There the Court by CHIEF JUSTICE PARKER said: "When the owner of property who has the right to dispose of it in such manner and under such limitations as he pleases, confers upon another the general power of making such disposition of it, as he pleases, or in other words invests him with all the attributes of ownership over it and the other accepts the power thus tendered to him, and undertakes to exercise dominion over the subject-matter as if he was owner, the original proprietor having authorized the other to treat it as if it was the property of the latter, by exercising all the power over it which he could exert if it were entirely his property; and he having undertaken to treat it as if it was his property by making a disposition of it, under such a power, a Court of equity may well do what the parties have done; that is treat it as the property of the appointer and make it subject to the incidents attending such property."
Without inquiring whether this is a correct enunciation of the principles applicable to the state of facts, therein set forth, it is enough to point out how widely the facts of that case differ from the one at bar. Here William Goodwin became entitled under the will of his mother, to an eqitable estate for and during his natural life. Cherbonnier v. Bussey, 92 Md. 413, et seq.
After his death his interest passed to such of his children and descendants as he should designate and appoint by last will; and in case he left no children or descendants then living, then in trust for such grandchildren of the testator as shall then be living to be equally divided among them. So that instead of having the right to dispose of the property as he pleased, William held only a life estate with power to appoint by last will to his children; and in the event of his leaving no children, then the property was to go to the grandchildren of his mother Penelope Goodwin. The power of appointment, conferred is to be among a limited class, viz., his children and descendants; and if there were none of these living at the time of his death, it was to go by the terms of the will, to such grandchildren as were then living. The power to appoint was therefore limited, to be executed among surviving children or descendants; and therefore William having left no children or descendants surviving him, the property passed by the terms of the will of Penelope Goodwin to her grandchildren who were then surviving him, equally. "Where there is an express estate for life, given by will with liberty to give the fee to particular persons, the devisee will take for life with a power to appoint the estate to the objects designated." 1 Sugden on Powers (3 Am. ed.) — p. 179. It is obvious therefore that if the contention of the appellant were sustained; that is, if it could be held that the property in which he held an equitable life estate only with this power of appointment could be diverted to the creditors of the donee, the effect would be, that it cannot go to the persons whom the donee might appoint, nor in the event of a failure of children of William, to the grandchildren; as was directed by the will of Penelope Goodwin. Such diversion to creditors, therefore would be in contravention of the testator's intent as expressed in her will.
This view is maintained in many cases in this State and elsewhere. The subject has been thoroughly discussed, in Wales, Admr., v. Bowdish's Extr., 61 Vt. 31, and many authorities are there cited. In Commonwealth v. Duffield, 12 Pa. St., the same doctrine was held; that Court speaking through CHIEF JUSTICE GIBSON said, "An appointee derives title immediately from the donor of the power, by the instrument in which it was created; and consequently not under but paramount to the appointor by whom it was executed; by which it is impossible to conceive that the appointor's creditors have an equity." In Maryland this doctrine has been clearly stated in the case of Balls v. Dampman, Extx., 69 Md. 390, where it was said that Mrs. Balls "had under her husband's will only the power to appoint, that is, to name by will, the person or persons to whom the property should go; and she had no authority to devise it for the payment of her debts, that is, to encumber or consume it altogether for her own use. The construction insisted on would, if adopted, practically convert her from a mere life tenant into an owner of the fee. She had no right to bind this property for the payment of her debts, or to fasten those debts upon it, and had such an intention on her part been expressly stated in her will, it could not have been given effect because not within the scope of her power of appointment." And in Wilks v. Burns, 60 Md. 68, it was held, that the donee of a power, having no reversionary interest and required to execute the power if at all, by will, could not enter into a contract with reference to the execution of that power, and that the contract by which the donee of the power agreed to execute an irrevocable will was void," and this was afterwards reaffirmed in Worthington v. Rich, Trustee, 77 Md. 270. In Conner, Ex'rx., v. Waring, 52 Md. 733, it was said, "the party taking under and by execution of the power, took under the donor and in like manner as if the power and instrument executing it, had been incorporated in one instrument."
It follows, therefore, that the bill cannot be sustained on any ground and therefore the decree of the lower Court must be affirmed.
Decree affirmed, the appellant to pay the costs.
(Decided February 13th, 1906.)