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ENGLISH, SMITH, MACKALL & HOFFMAN V. FOXALL, 27 U. S. 595 (1829)
U.S. Supreme Court
English, Smith, Mackall & Hoffman v. Foxall, 27 U.S. 2 Pet. 595 595 (1829)
English, Smith, Mackall & Hoffman v. Foxall
27 U.S. (2 Pet.) 595
A marriage settlement provided that the trustees, after the death of the husband, should stand possessed of a bond executed to them by the husband and of the sum of $37,038 to be received by them upon trust to place out the same when it shall come into their hands at interest on freehold securities, or invest it or any part of it in the purchase of stock of the United States of North America or bank stock there, with the approbation of the wife, and to call in and replace the same and reinvest the same and the produce thereof from time to time upon or in such securities or stock, with the approbation of the wife.
It is not an unreasonable interpretation to say that the wife, who survived the husband, was to have a controlling agency within the limitation prescribed by the contract. She has not an arbitrary and unlimited discretion. The investment is restricted to three objects -- freehold securities, United States stock, or bank stock, and the trustees are not authorized to make any other investment. The trustees are bound "to make the investment in any one of the funds mentioned which the wife might request or direct."
The husband by his will confirmed the marriage settlement, and he further declared
"That if the sum of $37,038 secured to be paid to the trustees should at any time be found insufficient to raise and bring into the hands of the trustees the clear annual sum of $2,222.22, the annuity secured to be paid to his wife by the settlement, then the trustees of his will shall from time to time transfer to themselves, as trustees of the settlement, out of the residuum of his estate, such sum or sums of money as may from time to time be found necessary to make up any deficiency there may happen to be between the current amount of the interest and produce of the principal sum and the amount of the annuity, so that in no event less than $2,222.22 shall be raised annually for his wife or for her benefit in the United States."
The personal estate of the husband, exclusive of the sum placed in the hands of the trustees of the annuity, was so invested as to produce six percentum per annum, and the direction of the wife to keep invested in six, percent stock of the United States the $37,038 produced a deficiency in the annuity which she claimed to have made up from the residuary estate. The wife has a right to claim this deficiency to be so made up.
There is no doubt but that under the general prayer in a bill in chancery for general relief, other relief may be granted than that which is particularly prayed for, but such relief must be agreeable to the case made by the bill.
The appellee in these cases is the widow of Henry Foxall, and the appellants in the first case are the trustees named in a marriage settlement executed by Henry Foxall at the time of his marriage with the appellee, and in the second they are the trustees, executors, and legatees named in the will.
On the marriage of Henry Foxall with the appellee in England in 1816, a contract was entered into for an annual income of £500 sterling, or $2,222.22, for the life of Mrs. Foxall, to commence at his death; for her jointure, and in lieu of her dower, and, on the decease of Mr. Foxall, the sum of $37,038, was then to be raised and paid to the trustees for the purpose of securing the same.
In the settlement it is declared that upon the treaty for the marriage, it was agreed between the parties thereto, Henry Foxall and Catharine Holland, that should she survive him, he would provide and settle on her an annual income of £500 sterling, equal to $2,222.22, in the nature of a jointure for life, and in bar of dower; that he should devise to her his messuage in Georgetown, and assign her his furniture and carriage for life in increase of her jointure; that her property, which was wholly personal, should vest in her, but that all future property should be at her disposal as if she were a femme sole; and that the children of the marriage as well as a present daughter of Henry Foxall should be dependent on him for support. The marriage settlement also recites that in part performance of the same, Henry Foxall had made his bond in the penalty of $74,116 to the trustees, to be void on payment by his executors, within six months from his death, of $37,038, with interest at six percent
It is then declared by the deed that in case the appellee should survive said Henry Foxall, the said trustees should stand possessed of said bond, and said $37,038 to be received by them
"upon trust to place out the same, when it shall come into their hands, at interest on freehold securities or invest it or any part of it in the purchase of stock of the United States of North America or bank stock there, with the approbation of said Catharine Holland, and to call in
and replace and reinvest the same and the produce thereof from time to time upon or in such securities or stock, with the approbation of said Catharine Holland, and to pay the interest and dividends of the said sum, securities, or stocks from time to time as the same should be received to her the said Catharine Holland or her assigns, or permit her or them to receive such interest or dividends for her life, for her separate use,"
&c. And after her death upon trust to pay, transfer, and assign said $37,038, and the securities or stocks in or upon which it should be placed out or invested, and the dividends, &c., unto the executors or assigns of the said Henry Foxall.
Mr. Foxall died in England in 1823, having left a will dated 12 April, 1823. The first clause in the will is in these words:
"First, I do hereby ratify and confirm in every respect the settlement made upon my marriage with my dear wife Catharine, and do direct the provisions and trusts of the same and the condition of the bond entered into by me upon my said marriage, to be faithfully performed and observed:"
"I do further direct that if the sum of $37,038, secured to be paid to the trustees of said settlement, should at any time and from time to time be found insufficient to raise, within these United States and bring into the hands of the said trustees of said settlement there the clear annual sum of $2,222.22, the annuity secured to be paid to my said wife by the said settlement, then and in such case the trustees of this my will do and shall from time to time transfer to themselves, as trustees of said settlement, out of the residuum of my estate, such sum or sums of money as may from time to time be found necessary to make up any deficiency there may happen to be between the current amount of the interest and produce of said principal sum and the amount of said annuity, so as that in no event less than the said sum of $2,222.22 shall be annually raised for my said wife, or for her benefit within the United States."
He also gives her, over and above the provisions made for her benefit by said settlement, a legacy of $500, the
plate, &c., purchased since the marriage, and all his servants.
He then gives the $37,038 "stipulated to be raised and paid to the trustees of his marriage settlement" after the death of his said wife "to the children of the marriage absolutely," and if none, directs it after the death of his wife to sink into the residuum of his estate.
The will contained a proviso that any depreciation in the value of his property should be borne equally by all his legatees, "his wife, and any child or children he might have by her, excepted."
Hoffman, Smith, McCall and McKenney were appointed executors of the will. There were no children of the marriage, and but one daughter, Mrs. McKenney, by a former wife. The estimate placed by Mr. Foxall upon his property at the time of his decease was $270,000. In December, 1827, the trustees valued the real estate at $70,000 and the personalty at $88,000.
At the decease of Mr. Foxall in 1823, $32,645 of six percent stock of the United States stood in his name, and at that time the government stocks were as much above par as they were when this bill was filed. Mr. Foxall was at that time well acquainted with the price of government stocks and of the stocks of the local banks, the latter of which, it was in evidence, could have been purchased at that time at ninety-six percent
On 17 July, 1824, Mrs. Foxall being then in England, the executors addressed the following letter to her:
"The executors of your late husband are desirous of paying over to the trustees of the marriage settlement the sum of $37,038 according to the directions in the will. It is deemed necessary that you should give instructions to the trustees named in the marriage settlement before they can feel themselves authorized to invest the money. You will please to communicate, at as early a date as convenient your wishes on this subject."
And on the same day the trustees addressed the following:
"The executors of your late husband, the Rev. Henry
Foxall, are ready to pay over to us, the trustees named in the marriage settlement, the sum of $37,038 for the purpose of providing the annuity secured to you in said settlement. In said settlement it is stipulated that we are to place it out"
"at interest on freehold security, or invest it, or any part of it in the purchase of stock of the United States of North America, or bank stock there, with the approbation of Mrs. Foxall."
"We are therefore compelled to wait for your instructions. The will, you will doubtless have perceived, has made provision that in case the said fund of $37,038 should not produce in interest, the annual payment to be made to you of $2,222.22, there shall be provided from his estates whatever may be deficient, so that in no case shall you receive a less amount."
"It is presumed, therefore, you will give the trustees a general authority to manage said trust fund so as to produce the best interest which can be safely done; unless such general authority be given, we should have to wait for new instructions whenever any payment of principal may come into our hands. It is highly probable that when you answer the letter sent with a copy of the will, you will give such directions as we have alluded to. If you have not, you will perceive the necessity of having it done without delay, as we cannot move in the business until we have your directions, which may be given either by letter or any other authentic writing. It will be necessary, in case you do not come to this country, that you authorize some person here to receive for you the annuity, as we are bound to pay it within the United States. We are thus particular, as it takes at least three or four months to get an answer from the interior of England."
To these letters the following answer was written by Mrs. Foxall and received by the executors and trustees:
"Gentlemen: In reply to your letter of 17 July last, in which you request my approbation relative to the investment of the $37,038, to provide my annuity according to my marriage settlement, I acquaint you that in the judgment of my late husband and according to my own, the stock of the United States of North America is preferred by
me to freehold security or bank stock, and that I shall approve of the investment of the principal sum in that fund, and not on real security or bank stock, and beg it may be so invested."
Mrs. Foxall returned to the United States in December, 1824, and a similar application was made to her by the trustees, with the same effect, and she remained in the belief that the investment was made according to her wishes in stocks of the United States. $10,645, six percent stock, were afterwards paid off by the government without the knowledge of Mrs. Foxall, and of this sum $10,000 was also, without her knowledge, loaned to one of the trustees and to another person on their promissory note, secured by a pledge of $12,000 stock of the Farmers' & Mechanics' Bank of Georgetown.
In 1826, Mrs. Foxall came to know that no separate investment had been made for her annuity, and she then, in writing, requested that the sum of $37,038 should be invested in stock of the United States for that purpose. This was refused by the executors and trustees, they contending that the right was with them to make the investment as they should think best, free from the control of Mrs. Foxall and without her approbation.
Upon this refusal, Mrs. Foxall filed the bill in the circuit court against the trustees, claiming to have the provisions of the marriage settlement carried into effect and to have the amount of the same invested in some of the government stocks in her and their joint names. The bill calls for a discovery where the $37,038 had been invested, and to whom in particular it had been loaned, and for general relief.
The trustees, in their answer, submit themselves to the court, admitting they have ample funds for the purpose, but raise the question whether Mrs. Foxall has the right to have the $37,038 invested in the stock of the United States, referring to a cross-bill filed by them for the reasons why they suppose she has not that right. They state that $22,000 was then invested in United States stock, and that all the residue of the personal estate was in their hands and vested in real
securities of the most undoubted safety, producing an interest of six percentum per annum.
They deny the right of Mrs. Foxall to the benefit of the provision of the settlement requiring her approbation to the investment, and of that of the will throwing the loss of such investment upon the residue of the estate, averring them to be inconsistent, and require that she be held to elect between them. And that if her bill, already filed, be considered as an election to take under the settlement and the investment prayed by her shall be decreed, that it shall be further decreed that she shall receive the interest of the same, so to be invested, in bar of all claim upon the residuum of the estate, under the provision of the will for any deficiency.
In December, 1827, a statement was filed by the trustees showing the nature of the securities in which the estate was invested and to whom the moneys paid in had been loaned.
The trustees in the marriage settlement, the executors of the will of Mr. Foxall, and the daughter of Mr. Foxall with her husband Samuel McKinney, filed a bill against Mrs. Foxall, the appellee, the object of which is to keep the $37,038 in the hands of the trustees of the will mixed up with the general mass of Mr. Foxall's estate, and to prevent the investment of that sum in the stock of the United States, because, so invested, the stocks being above par, it would not produce the full amount of the annuity. The bill denies the right of Mrs. Foxall to select the fund for the investment of the sum of $37,038, and asserts that if she has that right, she must forego the same in order to enjoy the benefit of the provisions in the will, asserting that the testator, by inserting that clause in his will, providing that every deficiency in the amount of the annuity should be borne by his general estate, intended to curtail the rights of the settlement, and that she must be put to her election between the provisions of the will and those of the settlement.
The answer of Mrs. Foxall to this bill denies the inconsistency between the provisions of the settlement and the will; contends that she is entitled to the benefit of both; that the has a right to choose the funds for investment, and to call on the residuum of the estate to make good the deficiency
that may arise from its not producing six percentum to pay her annuity, and declaring that her husband always advised and recommended her to invest it in United States stock, and intimates her desire to insist on its being so done, even if the loss to arise from it is to fall upon her.
The causes were, by consent, heard together in the circuit court, and that court decreed in the first cause that the investment of the $37,038 should be made as she desired and the interest paid annually to her, and that if such interest fell short of producing $2,222.22 (that is, 6 percent) per annum, the deficiency should be paid to her annually out of the residuum of the estate in the hands of the trustees.
In the second case, the court decreed the bill to be dismissed.
From these decrees the defendants in the court below in the first case, and the complainants in the second case, appealed to this Court.
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