Membership remains even though subject removed from group

1. I created a Group A with a single subject X.
2. I created a Group B with a single subject Y.
3. I created a Group C that is union of A and B. It has members X and Y.
4. I created a Group D with a single subject Group C. Indirectly it has members X and Y.
5. I removed subject X from Group A. This resulted in subject X no longer in being member of Group C as expected, but subject X remained a member of D.